Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

PRIVATE BUSINESS

BRITISH WATERWAYS BILL [Lords]

Motion made, and Question proposed,
That the Promoters of the British Waterways Bill [Lords] may, notwithstanding anything in the Standing Orders or practice of this House, proceed with the Bill in the present Session and the Petition for the Bill shall be deemed to have been deposited and all Standing Orders applicable thereto shall be deemed to have been complied with;
That, if the Bill is brought from the Lords in the present Session, the Agent for the Bill shall deposit in the Private Bill Office a declaration signed by him, stating that the Bill is the same, in every respect, as the Bill which was brought from the Lords in the last Session;
That as soon as a certificate by one of the Clerks in the Private Bill Office, that such a declaration has been so deposited, has been laid upon the Table of the House, the Bill shall be deemed to have been read for the first and second time and committed (and shall be recorded in the Journal of this House as having been so read and committed);
That all Petitions relating to the Bill presented in the last Session which stand referred to the Committee on the Bill, together with any minutes of evidence taken before the Committee on the Bill, shall stand referred to the Committee on the Bill in the present session;
That no Petitioners shall be heard before the Committee on the Bill, unless their Petition has been presented within the time limited within the last Session or deposited pursuant to paragraph (b) of Standing Order 126 relating to Private Business;
That, in relation to the Bill, Standing Order 127 relating to Private Business shall have effect as if the words "under Standing Order 126 (Reference to committee of petitions against Bill)" were omitted;
That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the last Session.—[The First Deputy Chairman of Ways and Means.]

Hon. Members: Object.

Oral Answers to Questions — NATIONAL FINANCE

Late Payers

Dr. Goodson-Wickes: To ask the Chancellor of the Exchequer what representations he has received on his proposals to remedy the practice of late payment to suppliers.

The Economic Secretary to the Treasury (Mr. Anthony Nelson): My right hon. and learned Friend the Chancellor of the Exchequer has received a number of letters supporting the Budget announcement of consultation on measures to promote prompt payment. Responses to the consultation paper, which should be addressed to the Department of Trade and Industry, should reach that Department by 31 March 1994.

Hon. Members: We cannot hear.

Madam Speaker: Order. I have already given instructions that the microphones should be switched on. Perhaps we can proceed as it is being taken care of.

Dr. Goodson-Wickes: Hon. Members on both sides of the House tell of small businesses in their constituencies whose survival has been put at risk by late payments from large companies. Will my hon. Friend investigate allegations that such practices are condoned or even encouraged by managements of certain companies? Does he agree that that is another example of the unacceptable face of capitalism which threatens the survival of small businesses, the growth of which the Government have done so much to encourage?

Mr. Nelson: My hon. Friend's complaint is clearly echoed in many of the representations that hon. Members on both sides of the House have received. The Government deplore big companies taking advantage of small companies by the wilful late payment of bills. Many of those small companies have to pay in cash or in advance when big companies can delay payment. That is exactly why my right hon. and learned Friend has produced the consultation paper and I hope that it will be well received.

Mr. William Ross: Surely the best way to bring the big companies to their senses is to make them pay interest on the bills that they owe? Would not it help companies of all sizes if interest rates generally were reduced?

Mr. Nelson: That is indeed one of the proposals that are being mooted in the Government's consultative paper. Clearly, there are problems with legislation, in that it interrupts the contractual arrangements between companies. My right hon. and learned Friend in putting forward the proposals, clearly believes that there is an endemic problem, which is not just a reflection of the period of high interest rates, but has become a matter of culture in business payments. It needs to be dealt with and we look forward to the response to the paper.

Fuels

Mr. David Evans: To ask the Chancellor of the Exchequer if he will make a statement on the effect of taxation on the consumption of carbon dioxide-producing fuels.

The Paymaster General (Sir John Cope): Taxes on energy products are one factor affecting their consumption and hence total carbon dioxide emissions.

Mr. Evans: I thank the Minister for his reply. Does he agree that we put political considerations aside when we put VAT on fuel and that we were more concerned with saving the planet? We put a generous compensation package in place—the most generous ever—which made the figure proposed by the hon. Member for Glasgow, Garscadden (Mr. Dewar) a weak, wet 50p. We beat that 50p. Does the Minister further agree that if we wired up that lot opposite, they would not produce enough energy to turn on the lights of Madam Speaker's Christmas tree?

Sir John Cope: As usual, my hon. Friend tells the truth with a flourish. The Labour party supports Rio and the reduction in borrowing, but it is not willing to accept the consequences.

Mr. Wigley: In the context of road fuels, has the Minister had representations from those involved in bus companies? The way in which the rebate works will considerably increase the cost of bus transport, probably to a greater extent that the Treasury has anticipated. Is he studying the matter? Can he tell the companies that the Treasury will find a way round the problem?

Sir John Cope: We always study carefully all representations that we receive. However, the cap on the bus fuel rebate will also encourage energy efficiency which, as the hon. Gentleman knows, is part of the point of the measure.

Mr. Dunn: Is not it a fact that the hon. Member for Glasgow, Garscadden (Mr. Dewar) complained about the way in which his proposal was treated only after the Budget was announced, when he realised that the Government were meeting the amount for which he had asked? Should not he make it plain that he did not complain before the Budget?

Sir John Cope: It came out clearly in the debates last week, following the Budget, that the hon. Member for Garscadden did not raise the matter until after the Budget statement.

Ms Harman: Will the Minister admit that 70p a week compensation for a pensioner couple will not cover the VAT on their fuel bill? Does he recognise how bitter and angry those pensioners will feel when they recognise that, in addition to the VAT, they will have to pay 70p a week on their insurance premiums, which will wipe out the effect of the VAT compensation? Is not that typical of this Conservative Government? Even when they are forced grudgingly to give a little with one hand, they take it all back—and more—with the other.

Sir John Cope: The decision on compensation will add £1·30 a week to the single pension and £1·85 a week to the married couple's pension by April 1996, when the measure is introduced in full.

Mr. Clifton-Brown: Does my right hon. Friend agree that if we are to meet the objectives of the convention on climate change, to which we signed up in Rio, we need to encourage more energy efficiency in the domestic sector, which my right hon. and learned Friend has done in his Budget by doubling the home energy efficiency scheme? We also need to burn hydrocarbons more efficiently in the transport sector. My right hon. and learned Friend has encouraged that by his pledge to increase the price of hydrocarbons by 5 per cent., which is a very tough target in real terms over the next few years.

Sir John Cope: All this goes towards fulfilling our Rio commitments which, as I said just now, the Labour party supports, although it will not accept the means outlined by my hon. Friend.

Public Spending

Ms Abbott: To ask the Chancellor of the Exchequer what estimate he has made of the effect of his public spending plans for growth in the economy.

The Chancellor of the Exchequer (Mr. Kenneth Clarke): Taking full account of effects of the Budget, my forecast is for GDP growth of 2·5 per cent. in 1994.

Ms Abbott: Yesterday, under questioning in the Treasury Select Committee, the Chancellor admitted that the total effect of his tax changes would be to put up income tax by the equivalent of 7p in the pound and to put up the average family's tax bill by £9 a week. You can debate—(Interruption.]

Madam Speaker: Order. The hon. Lady must put a question to the Chancellor.

Ms Abbott: Does the Chancellor agree that whatever one says about the effect of his public spending proposals on growth, the country will never trust the Conservatives on tax again?

Mr. Clarke: In the long session yesterday in the Select Committee, I certainly accepted that I had raised taxation to a certain extent and that I had reduced public spending as well to get down the level of public borrowing, which would otherwise be a constraint on recovery. The effect on the individual man and woman will depend not only on one feature of that, but on what happens to economic recovery.
At present, the British economy is the only major economy in western Europe enjoying any growth. We have inflation down to its lowest level for 26 years. We have unemployment coming down again today, which is not an experience shared anywhere in western Europe. That is what will affect the well-being of ordinary men and women, if we can strengthen the recovery. That is the context in which the hon. Lady should put her criticisms of tax policy. She and her party do not have the first idea —at least, they have given no hint of it—of what they would do about borrowing and how they would sustain the recovery.

Mr. John Townend: Does my right hon. and learned Friend accept that cuts in public spending have less effect on consumer confidence than do increases in taxation and, therefore, less impact on growth? Does he accept that the overwhelming majority of Conservative Members welcome the cuts in public spending under the Budget and the contribution made to bringing the Budget deficit under


control? Does he further accept that there is still an enormous amount of waste, overmanning and inefficiency in the public sector, especially in local government? Will the Government launch a national campaign to cut that waste and to make further public savings?

Mr. Clarke: Obviously, it depends on how one makes the spending cuts. I agree with my hon. Friend that there is plenty of scope to cut out waste in the public service. Many dedicated public servants do just that. We have never embarked on an exercise of reducing public spending quite so sharply as we have on this occasion. It will not damage the economy, because a great deal of the savings will come from administrative improvements and from holding down the pay bill of those who work in the public sector to a level —for the same reasons as the pay bill will be held down in the private sector—to create the conditions in which we can have economic growth and today's welcome fall in unemployment can be repeated month after month. That is why we take the tough and necessary decisions on tax and spending. I will be grateful to my hon. Friend for his support when we do so.

Mr. Nicholas Brown: As well as increasing taxes "to a certain extent", the Chancellor has also committed himself to a very tight new control total for the non-cyclical elements of public expenditure, allowing for growth of only 3·8 per cent. between 1992–93 and 1998-99. Is not it the case that, at the same stage of the economic cycle under Baroness Thatcher's Government, comparable spending rose by 12·5 per cent? Is not it therefore incumbent on the Chief Secretary to say just what hardship and pain are to be caused to achieve these undesirable and hitherto unachievable spending targets?

Mr. Clarke: As a Government, we are in a position where we are very conscious of the need to constrain public spending. We have improved the opportunities for the private sector to be released and achieve growth, investment and new job creation. We have set a very challenging target for ourselves, but it is not impossibly challenging at a time when we have got inflation down. The headline figure is 1·5 per cent.—the lowest for 25 years. It is the first time since 1960 that inflation has been below 2 per cent. for almost every month in the year. That makes the spending targets realistic. When we made our spending decisions—as the hon. Gentleman will recall—we protected all our priorities. Spending on health and higher education was up, we had the new apprenticeship scheme and we protected our spending on law and order. It is a well-judged spending package.

Budget Response

Mrs. Gillan: To ask the Chancellor of the Exchequer what representations he has received in response to his Budget.

Mr. Kenneth Clarke: The Budget has been widely welcomed throughout the country.

Mrs. Gillan: At this festive time, will my right hon. and learned Friend agree with the owners of small and medium-sized businesses who have made representations to me that his Budget is a major step forward in creating the stable economic environment in which they can trade? Further, does he agree with them that the specific measures taken to help small businesses in the Budget, together with

the low interest rates and unprecedented low rates of inflation, make it possible for them to look forward to a very happy and prosperous new year?

Mr. Clarke: I believe so, and I am glad that my hon. Friend has had the same reaction from the small business people she has met as I have had from the people I have met, who have been generous in their comments on my Budget. Mr. Stan Mendham, who is by no means always uncritical of the Government, has been very praising of the Budget. A commentator described me as having something of a bee in my bonnet about small business. That is the case. I believe that in order to improve the prospects for investment in small businesses, it is legitimate to deregulate and take the burdens off them and encourage more risk capital and self employment in this country. I believe that it is in the small and medium-sized business that we will get the growth of employment that we require throughout the 1990s. I am gald that my hon. Friend approves of the fact that we laid such heavy emphasis on the needs of small business in the Budget.

Mr. Sheldon: Facing the consequences of the severe recession, is it not clear that the balance of payments deficit is more important than the Budget deficit? With the pound increasing in value steadily during the past six or nine months to a considerable extent, is it not also clear that this is the time to reduce interest rates, cut imports and encourage exports?

Mr. Clarke: I am glad that the right hon. Gentleman, who is very experienced in these matters, acknowledges that we are now firmly on top of the deficit in the public finances, and so is turning his attention to the balance of trade. He will know that, at the moment, it is difficult to get accurate figures on our trading position as we introduce the new system because of the introduction of the single market. Because our economy is so much stronger and demand is rising here compared to the continuing recession in Germany and France, there is a tendency for people to wish to sell into our economy, which is affecting our position. Otherwise, our trade figures are extremely good and our currency has been remarkably stable for the past few month—it has not been strengthening noticeably. Most importantly, British industry is retaining its competitiveness. We are still holding the advantage from devaluation. Our unit wage costs have fallen this year, and we are in a competitive position. I shall keep an eye on all the matters on which I usually keep an eye when deciding monetary policy, but I am reasonably optimistic about the British trading position as we come out of the recession.

Mr. Heald: I welcome the measures in the Budget which deal with small businesses. Does my right hon. and learned Friend agree that the measure suggested by the right hon. Member for Yeovil (Mr. Ashdown)—slapping an extra 1 per cent. on national insurance contributions for the self-employed—would be a disaster for small businesses and would affect the competitiveness of British industry?

Mr. Clarke: I entirely agree with my hon. Friend.

Mr. Skinner: What about what the Government are doing later today?

Mr. Clarke: My hon. Friend was speaking about an increase in the national insurance contribution for the self-employed. The hon. Gentleman is wrong. We are raising it for employees this evening.
If implemented, the proposal made by the right hon. Member for Yeovil would, as my hon. Friend said, damage the interests of self-employed people. Self-employment grew rapidly in the 1980s and, in a modern economy, it is desirable that we reduce the burden on people going for self-employment, rather than increasing it in the way proposed by the Liberal Democrats.

Mr. Beith: The Chancellor presumably recognises that the rate of contribution by the self-employed is below that paid by employed people and employers. As the Budget strategy depends very much on low interest rates and low inflation, will the Chancellor look carefully and favourably at the proposal made by the Treasury Select Committee today, which carries the support of all but one member of the Committee, for a central bank that has autonomous responsibility for monetary policy? Is not that the way to lock in low interest rates and low inflation? Will he give that suggestion the most careful consideration?

Mr. Clarke: I can agree to give the proposal careful consideration, but it requires much further debate and discussion. I am grateful to the Select Committee for its report. We shall have an opportunity, through the Bill being presented today by my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), to debate those matters in the House. I have an open mind on the subject, although people try to guess my opinion. I have a feeling that the Select Committee's proposal is becoming rather a fashionable cause. We should consider it with care, also taking into account such matters as parliamentary accountability for an increasingly more autonomous Bank of England.

Mr. Bill Walker: Has my right hon. and learned Friend received representations from the Scotch whisky industry, which has been telling me that the sensible treatment of excise duties in the Budget will have a substantial impact on its sales at home? Is he aware that that will increase the revenue to the Treasury and help the position abroad, because it sends the right messages for an industry that exports almost £2,000 million worth of products?

Mr. Clarke: I agree with my hon. Friend and I am glad that I was able to follow the precedent set by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont) in acknowledging the problems of the Scotch whisky industry and not increasing excise on its products. I hope that the industry will be able to take advantage of that and will recover its strength. I also hope that the industry derives the enormous benefits that could potentially accrue to it from the successful conclusion of the GATT round, which is the best piece of economic news that this and most other trading countries have received in 1993.

Mr. Gordon Brown: After the Chancellor's admission yesterday that the typical family will pay the equivalent of 7p in the pound more in income tax, will he also confirm that the typical family will, from April, be paying £10 a week more in seven separate tax rises and three new taxes? Will he also confirm that, while the wealthiest 1 per cent. received 33 per cent. of the income tax cuts made in the 1988 Budget, middle and lower-income Britain is now

paying 95 per cent. of the tax rises from this year's Budget? Are not the Tories now exposed not only as the party of higher taxation, but, as it always has been, as the party of unfair taxation?

Mr. Clarke: The hon. Gentleman uses what he describes as a "typical family". It is not an average family, but a family that he takes out of the middle ranks of those earning. I have acknowledged that we are increasing taxation. I made an hour and a quarter's speech describing my taxation increases. The hon. Gentleman's mistake is to say that that is the only effect that the Budget will have on the average family. If the hon. Gentleman had his way, he would follow policies that would increase inflation, again increase interest rates—now at their lowest level for 16 years—increase public sector borrowing, slow the recession recovery, reverse the fall in unemployment and probably cause it to increase again, and once more make this country extremely uncompetitive in world markets. That would do far more damage to the ordinary person than my Budget, which sorts out the problem with public finances so that we are clear to have a stronger recovery in the 1990s.

Economic Competitiveness

Mr. Lidington: To ask the Chancellor of the Exchequer when he next expects to meet his French counterpart to discuss economic competitiveness in Europe; and if he will make a statement.

Mr. Kenneth Clarke: I met Mr. Alphandery, the French Finance Minister, along with Finance Ministers from the other member states, to discuss European competitiveness at the recent European Council and ECOFIN meetings. I expect that we will discuss this issue further at future meetings.

Mr. Lidington: When my right hon. and learned Friend next meets his French counterpart, will he employ his customary energetic diplomacy to remind the French Finance Minister that an economic plan for Europe which involves higher borrowing, more help for state-funded white elephants and cuts in working hours would not encourage investment, but would cause any potential investor simply to shake his head sadly and take both money and jobs somewhere else?

Mr. Clarke: I think that my hon. Friend is assuming that the French Finance Minister is a bigger supporter of some proposals that come from the Commission in Brussels than he actually is. My colleague Mr. Alphandery is as big a sceptic as I am of some proposals, such as those my hon. Friend listed, that have been emanating from people with less well-judged ideas. The French Government have been imposing some strict austerity measures recently. They are making changes to their social security system to make it affordable and to reduce the costs on their employers. They have reduced their minimum wage for young people because they have found, as we would if we were to introduce one here, that the minimum wage created unemployment among young people. I assure my hon. Friend that my colleague Mr. Alphandery is somewhat nearer to his views and mine than he fears.
Nevertheless, France is not having the recovery that we are. It has a higher level of unemployment than we do and


I think that the French Government are looking with interest at what is happening on this side of the channel and propose to follow many of our measures.

Mr. Hoon: The French Government have obviously decided that the best way of promoting their economic competitiveness is in the negotiations with the German Government on the terms of the creation of a single currency. How does the Chancellor intend to influence those negotiations? Or is he content that Britain should remain on the European sidelines?

Mr. Clarke: We are not on the European sidelines. It is true that at the Finance Ministers' meetings that I attend I am more often in total agreement with the German and Dutch Finance Ministers and usually with the Spanish Finance Minister than with Mr. Alphandery. Nevertheless, Mr. Alphandery and I are agreed on about four fifths of the issues. Last week's debate was based on the Opposition party's crazy premise that all the Finance Ministers of western Europe were sold on the idea of borrowing enormous sums and spending enormous sums to create extra jobs.
I am in complete agreement on currency with the other members of ECOFIN, including the French and the Germans. Now we have to concentrate on achieving convergence in our economic performance to achieve that stability of exchange rates, which will follow. My French and German colleagues are as keen as I am on getting inflation down to the levels that the British are now achieving and on getting public sector deficits down to the level that we are now on course for. [HON. MEMBERS: "Come on."] The gulf exists between the British Labour party and other governing parties in western Europe.

Mr. Nicholas Winterton: Does my right hon. and learned Friend accept that Europe is increasingly uncompetitive and over-regulated? Does he further accept that the growth in the world will take place outside Europe, in north America, south America and the Pacific rim? When will he create policies for Britain's manufacturing and construction sectors to enable us to take advantage of the real growth outside Europe?

Mr. Clarke: I agree with my hon. Friend. We must make ourselves competitive with the countries in the Pacific rim and north America that are our rivals in world trade, but that point is increasingly appreciated in western Europe. As my hon. Friend talked about burdens on employers, he will be glad to know that at the recent summit in Brussels it was agreed that we should have an inventory of social regulations that bear down on employers and add to the costs of employment.

Mr. Winterton: At my request and that of the manufacturing alliance.

Mr. Clarke: I am glad that my hon. Friend went ahead of us to ask for that. We regard that as a considerable success in our negotiations.

Mr. Darling: Does the Chancellor accept that taxation and transport links affect Britain's competitiveness? As the Chancellor does not know when, or even whether, the channel link will open and as he put up taxes when the Conservatives said at the previous election that they would not, why should we believe a single word that he or any of his colleagues say at the next election?

Mr. Clarke: We are borrowing more money from the European investment bank than any other member state and investing it in Britain's infrastructure—for example, the Heathrow express, the Jubilee line extension—[Interruption.] They are under construction. Until recently, expenditure on Britain's road programme was about 40 per cent. higher in real terms and railway investment in Britain was 40 or 50 per cent. higher than five years ago. We are investing heavily in our infrastructure and we are ahead of our partners in Europe in developing it using European instruments—[Interruption.] The debate that we had last week was based on the dire proposition of the hon. Member for Dunfermline, East (Mr. Brown), who had not read the document that he was talking about, that Mr. Delors was offering us some money to build the channel tunnel high-speed rail link. That rail link has not yet been built because it has not been designed.

Mr. Jessel: With regard to economic competitiveness in Europe in the auction of works of art, will my right hon. and learned Friend join me in congratulating my right hon. Friend the Paymaster General on the successful outcome of the long and difficult VAT negotiations, preventing that valuable market from being driven out of Britain and the Common Market to Geneva and New York?

Mr. Clarke: I happily join my hon. Friend in those congratulations. I happened to be there when the final decision was taken in the Council last week, and he is right to say that all the negotiations have been carried out with considerable skill by my right hon. Friend the Paymaster General.

Education Expenditure

Mr. Win Griffiths: To ask the Chancellor of the Exchequer what percentage of total expenditure was devoted to education in 1980–81, 1984–85, 1988–89 and 1992–93.

The Chief Secretary to the Treasury (Mr. Michael Portillo): For the years in question, the percentages of total expenditure devoted to education were 11·8 per cent., 10·7 per cent., 11·8 per cent. and 11·9 per cent.

Mr. Griffiths: I thank the Minister for that reply. Does he agree that our spending on education as a percentage of total expenditure is not as high as that of most of our competitors and that, in particular, we have a dismal record on nursery education on which we need to spend far more in order to give our children the best possible start in life?

Mr. Portillo: The hon. Gentleman heard the figures that I gave, which I do not think he expected, and I spared his blushes by not mentioning that the number of schoolchildren had fallen by 1 million during that period, so that expenditure per child had risen by 50 per cent. in real terms. The hon. Gentleman is interested in international comparisons. He might think that education was of a high standard in Germany and Japan, but the percentage of gross domestic product spent in Germany and Japan was 3·2 per cent. and here it is 4·8 per cent.

Mr. Forman: Is it not abundantly clear from my right hon. Friend's exchange with the hon. Member for Bridgend (Mr. Griffiths) that my right hon. Friend shot the hon. Gentlman's fox? Is it not equally clear that the Government believe in investing in human capital and


have had consistent policies to that end over the past 15 years? Are they not right to insist that those who benefit directly from higher education should bear a greater proportion of the burden?

Mr. Portillo: My hon. Friend is well placed to comment on those matters. He knows that we have increased the proportion of our young people in higher education to about one in three, which is a rise from one in eight in 1979. He also knows that the number of young people participating in further education will increase by about 250,000 in the next three years.
My hon. Friend says that it will be right for students to bear a greater share of the burden. We certainly believe that where the state provides means-tested help for students' maintenance, it is right that students should make a greater contribution by taking a greater proportion of their funding through loans that are repayable if they find employment at about the average level of earnings. I am sure that that is fair and just. It enables us to make that enormous increase in educational provision.

Mr. Andrew Smith: How on earth does the Chief Secretary square what he has just said with the reports of his views that the target of one in three need not be met and that the country does not need that many graduates by the year 2000? He believes in putting the right-wing dogma of cutting expenditure over the needs of education. He said that he wanted to impose the cost of education on students. Does not that show that he puts the dogma of right-wing Tory ideology over the need for investment in education and opportunities?

Mr. Portillo: I shall tell the hon. Gentleman what I think is important. So far, all the discussion has been about how much money we are putting into education. There should also be a discussion about the quality that we get out of education, the number of people whom we educate and the qualifications with which we put them into the outside world. The hon. Gentleman cited certain of my views. If he has the documents in which I stated them, he should lay them on the table. If not, he should stop indulging in gossip.

Balance of Payments

Mr. Jacques Arnold: To ask the Chancellor of the Exchequer if he will make a statement on the prospects for the balance of payments.

Mr. Portillo: Unit labour cost performance is excellent and competitiveness has been much improved. In spite of weak activity abroad, the trend in the visible deficit is downard, with exports at record levels.

Mr. Arnold: Does my right hon. Friend agree that that performance is a considerable tribute to British exporters? Will their performance not be further enhanced by the successful outcome of the negotiations on the general agreement on tariffs and trade, into which the Government have put so much effort in recent months?

Mr. Portillo: I thank my hon. Friend for those remarks. My right hon. Friend the Prime Minister, in particular, has been a major force in pressing for the most liberal outcome to the GATT negotiations. The GATT outcome is estimated to be worth $270 billion to the world economy. My right hon. Friends the Prime Minister and the President

of the Board of Trade have put great emphasis on that benefit to the world economy. That benefit far outweighs the individual difficulties of countries. Although we well understand those difficulties, they are definitely less important than that benefit.
My hon. Friend refers to the benefits to British industry. Earlier, my hon. Friend the Member for Tayside, North (Mr. Walker) spoke about the Scotch whisky industry, which exports £2 billion-worth of its products and faces tariffs of 30 per cent. in Japan, of 250 per cent. in Singapore and of 20 per cent. in New Zealand. The GATT deal is set to sweep away those tariffs progressively, which is good news for British industry.

Mrs. Helen Jackson: Is the Minister aware of the deep concern in South Yorkshire about the state of the engineering and steel industry? Yesterday, United Engineering Steels, which is one of the United Kingdom's prime exporters and at the core of United Kingdom industry, had to shed 400 jobs. That company is convinced—

Madam Speaker: Order. The hon. Lady must ask a direct question now.

Mrs. Jackson: My direct question is: what will the Government do that they did not do in the Budget to support this country's core manufacturing industry, so that the jobs of highly skilled workers and engineers in our constituencies are not lost?

Mr. Portillo: The House heard my right hon. and learned Friend the Chancellor say earlier that unemployment fell last month. It fell across the country and, incidentally, it fell in Sheffield.
The engineering industry depends on the success of other British industries, for instance, our car industry. As a result of the competitive conditions that we have sustained in Britain, we are attracting the bulk of investment into the European Community. That is because we have maintained competitive rates of taxation and that, in turn, is because we have imposed restraint on public spending. British industry has responded magnificently, improving its productivity in manufacturing by more than 4 per cent. in the past year and reducing its unit wage costs, while those costs have risen in Japan and Germany. That has given British industry a real competitive edge. The hon. Lady should be celebrating that, not carping.

Mr. Jenkin: Does my right hon. Friend agree that the prospects for our balance of trade have significantly improved since we withdrew from the exchange rate mechanism a little more than 12 months ago? Does he further agree that if we were to enter a single currency in the EC, which would involve huge costs to sustain both it and the disparities in the EC, Britain would be made less competitive and it would be bad for our balance of trade?

Mr. Portillo: The prospects for our balance of payments have been altered in recent months. I do not know whether my hon. Friend is aware that the deficit for 1992 has been revised downwards, from £12 billion to £8·5 billion, and that our forecast for the two years ahead has also been revised down, from £17·5 billion to £9·5 billion in 1993 and from £18·5 billion to £9·5 billion in 1994.
I believe that the really important factor is not any change from moment to moment in the exchange rate but


the underlying improvement in competitiveness which is due to higher productivity and the control of unit wage costs. A single currency is not currently on the European agenda.

Inflation (NHS)

Ms Lynne: To ask the Chancellor of the Exchequer what account he took of the level of national health service inflation in determining his allocation of resources to the Department of Health.

Mr. Portillo: The Government reached a view on the appropriate level of national health service spending, taking into account the GDP deflator and the scope for efficiency improvements.

Ms Lynne: Is the Minister aware that the British Medical Association says that the real inflation figure in the national health service is 3·9 per cent? Does he agree that the announcement in the Budget will therefore lead to a decrease in NHS spending power?

Mr. Portillo: I calculate that in the year ahead the NHS will be able to treat 4 per cent. more patients than this year. Once again, I urge the hon. Lady and other hon. Members to concentrate on outputs, not inputs. Surely what matters is how many people get treated, not how much money gets put in.
The hon. Lady underplays the tremendous scope in the NHS for improving efficiency. Last year, the northern region was able to increase its efficiency by nearly 4 per cent., as was the Oxford region, with the west midlands region only a little behind—the Mersey region was very close, too. For all those reasons, we can increase both efficiency and the number of patients who are treated.

Mr. Marland: Does my right hon. Friend agree that the way to solve a problem is not necessarily to throw money at it but to get better value for money? Is he aware that the NHS trusts in Gloucestershire are doing just that? Gloucester Royal hospital will treat nearly 250,000 people this year—it is a trust. The Gloucestershire ambulance service, also a trust, is continually improving its service to patients, too.

Mr. Portillo: The reforms that my right hon. Friend the Secretary of State for Health and her predecessors have introduced have transformed the ability of the health service to provide efficient health care and to ensure that ever more patients are treated well and efficiently. The hon. Member for Rochdale (Ms Lynne) was wrong to talk about a rate of inflation in the health service. Inflation in the health service is largely a matter of pay in the health service. That pay is under the control of management in the health service, and so it should be.

Taxation

Mr. Jon Owen Jones: To ask the Chancellor of the Exchequer what estimate he has made of the impact of the average family's tax bill of all the increases in taxation announced in his Budget last month.

The Financial Secretary to the Treasury (Mr. Stephen Dorrell): On average, the main tax-related changes proposed in my right hon. and learned Friend's Budget will cost households around 90p a week from April 1994 and an additional £1·80 a week from April 1995.

Mr. Jones: Is the Minister aware that, during the election campaign, my constituency was covered with posters announcing the so-called "Labour tax bombshell"? Since then, there has been a Tory tax explosion. Will the Minister explain why his party lied during the election about its tax proposals?

Mr. Dorrell: We saw earlier this afternoon the exact nature of that Labour tax bombshell. The hon. Member for Newcastle upon Tyne, East (Mr. Brown) stood at the Dispatch Box and called for increased public expenditure without giving the House any indication of how he intended that expenditure to be paid for. We will listen to the Labour party on the subject of lower tax when it tells us how it would finance its spending programmes.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Callaghan: To ask the Prime Minister if he will list official engagements for Thursday 16 December.

The Prime Minister (Mr. John Major): This morning, I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Callaghan: Is the Prime Minister aware that, exactly one year ago, a man who was suffering from mental illness climbed into a paddock of a zoo and was savagely mauled by lion? Despite the public dismay and concern over that incident, there are still thousands of mentally ill people who are tramping the streets of our major cities. They often live in cardboard boxes and are unable to look after themselves. Does the right hon. Gentleman agree that that is a national disgrace? Will he tell the House what action he will take to get those people off the streets and into places of care and protection?

The Prime Minister: As the hon. Gentleman knows, a great deal of action has been taken—most noticeably in London—to get many people, both those suffering from the ailment to which the hon. Gentleman refers and others, off the streets. That has been remarkably successful, and we will continue with that policy.

Mr. Lamont: Does my right hon. Friend recall his admirable speech at the Conservative party conference in which he said that the Union between Ulster and Britain was of immense importance to the Conservative party? Did not that echo his comment during the election that he stood with passion and commitment for the unity of this country? Is my right hon. Friend aware that that stands a little oddly beside his statement that this country has no strategic interest in Northern Ireland? Will my right hon. Friend therefore declare today that he believes in the Union, that he wants it to persist and that he believes it has been in the interests of the people of this country?

The Prime Minister: I do not believe that it stands remotely oddly with the joint declaration which I set before the House yesterday. The joint declaration reaffirms in unmistakeable terms the commitment that we have consistently given to the people of Northern Ireland, and I reaffirm that again now.

Mr. John Smith: Does the Prime Minister agree with the Chancellor of the Exchequer who told the Treasury Select Committee yesterday that the tax increases in this year's Budget were the equivalent of an increase of 7p on income tax?

The Prime Minister: What my right hon. and learned Friend said yesterday was that the aggregate sum of money raised after three years would amount to a crude equivalent of 7p. As the right hon. and learned Gentleman knows, that takes no account of growth in the economy and many other matters. When the right hon. and learned Gentleman talks about taxes, perhaps he might contemplate some of his proposals for new taxes. He is committed to eight more taxes, without any indication of how he would fund his spending promises or meet the debts that occurred as we helped vulnerable people through the recession.

Mr. John Smith: Does not the Prime Minister realise that the Chancellor told the Select Committee yesterday that the increases would amount to between £15 billion and £17 billion? Is there anything more crude than promising not to increase taxes before an election and putting them up by £15 billion afterwards?

The Prime Minister: The right hon. and learned Gentleman clearly does not realise that he is referring to the cost of Budget measures over the next three years. He is obviously deficient in understanding and has produced an entirely spurious one-off tax increase. I can understand why. I quote what the acting general secretary of the Fabian Society wrote about the right hon. and learned Gentleman in the "Labour Review". [Interruption.] I hope that the Opposition will laugh in a moment because this is what was written about the right hon. and learned Gentleman and his party:
If the characteristics being exhibited by the Parliamentary Labour Party were translated into the conduct of a single individual, she or he would certainly be in therapy.

Mr. John Smith: May I put a straight question to the right hon. Gentleman. [Interruption.] I know that his party does not want to hear it. Does he deny that before the last election, the Conservative party promised not to increase taxes?

The Prime Minister: Does the right hon. and learned Gentleman deny—[HON. MEMBERS: "Answer the question."] Does he deny what his hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) said about unemployment? He has had nothing to say today about unemployment, nothing about inflation and nothing about the eight taxes to which he is committed. [Interruption.]

Madam Speaker: Order. The House must settle down. I want to hear the Prime Minister. [Interruption.]

The Prime Minister: The Opposition do not, because they will not like it. Let us hear from the right hon. and learned Gentleman about his proposed taxes on tourism and development, his payroll tax, his education tax and the fact that he wants to have the same level of corporation tax as our competitors in Europe. What about his pollution tax and his windfall tax? The man does nothing but propose new taxes day after day.

Mr. Richards: Is my right hon. Friend aware that small businesses in my constituency are absolutely delighted with the Chancellor's Budget and that, together with low

inflation, low interest rates and increasing confidence, they are looking forward to a period of steady growth in the foreseeable future?

The Prime Minister: I have no doubt that that is the case. It is largely the growth and success of small businesses that are bringing down unemployment, and have been doing so month after month throughout this year. When unemployment figures go up, that is the only issue that concerns Labour Members. When those figures start coming down, apparently it is matter of no importance whatsoever.

Mr. Ashdown: May I draw the Prime Minister's attention to the fact that 1·25 million people are close to starvation in beleaguered central Bosnia, many of whose lives will be further put at risk in the bitter cold yet to come if the local power station at Kakanj is allowed to cease operations? Is he aware that, without vital supplies, that will happen in 20 days' time? Is he further aware the vital supplies provided by Britain are now being blockaded by the Serbs and Croats? Will the Prime Minister see what urgent action could be taken to make the provision of those vital supplies a test case for the Geneva convention on free passage of convoys so that those lives could be saved?

The Prime Minister: As the right hon. Gentleman knows, we are committed to the aid effort through the winter. We have made it clear, to pick up a point that will concern many hon. Members, that we still need to see the opening of Tuzla airport. We have so far provided more than £150 million-worth of assistance, and more than 2,300 troops are delivering that assistance, day after day, under the most difficult conditions. We are examining what we can do to deal with the present difficulties in Bosnia. The co-operation of parties on the ground will be needed to enable us to deliver the humanitarian assistance that we are prepared to deliver and fund. Throughout the conflict, our record has been second to none, and we will continue to do all that we can to ensure that people receive supplies throughout the winter.

Mr. James Hill: My right hon. Friend knows that the economy is beginning to emerge. We are reducing unemployment every day and there will be more money in the coffers by the time of the next Budget. Does he agree that more money must be allocated by the Treasury to the Home Office to enable the pledges given by my right hon. and learned Friend the Home Secretary to be carried out, not only on the neighbourhood watch security patrols but on the numbers of police required? In Hampshire, for instance, we asked for 120 extra police and were given only five this year. Does my right hon. Friend agree that all those measures are part of the Conservative philosophy and that, in the not-too-distant future, money will be available to fund them?

The Prime Minister: My right hon. and learned Friend the Home Secretary announced measures not very long ago which, if carried out, will enable approximately 5,300 police officers to move from dealing with administrative work out to the front line to deal with the matters that my hon. Friend mentioned. That action has been taken within the expenditure levels agreed by my right hon. Friend the Chief Secretary.

Mrs. Bridget Prentice: To ask the Prime Minister if he will list his official engagements for Thursday 16 December.

The Prime Minister: I refer the hon. Lady to the answer that I gave some moments ago

Mrs. Prentice: Does the Prime Minister agree with the Chancellor on the subject of stopping tax abuse? The right hon. and learned Gentleman said in his Budget speech that claims that more money might be found in that way were much exaggerated. Does the Prime Minister agree with the Public Accounts Committee, which found another £1 billion tax loophole for the aristocracy? Would not the Chancellor be better employed closing such tax loopholes than stinging every family in the country for an extra £10 a week as a result of his tax-raising Budget?

The Prime Minister: The hon. Lady should know that my right hon. and learned Friend closed a number of genuine loopholes in the Budget. That will yield about £2 billion over the next three years. The loopholes so beloved of the Opposition Front Bench are not loopholes generally but measures such as ending relief on capital gains inheritance—which would leave less for parents to hand down to children—and reforming the rules applying to non-domiciled status foreigners, which is the Opposition's latest idea. All the main parties agreed, when that measure was reviewed in 1989, that the existing rules should remain because they made Britain an attractive business location.
The Opposition's loophole campaign is a smokescreen to hide the fact that they have no idea how to fund their policies. They are trying to convince people that they could do so by closing tax loopholes, but what they would do is take away measures that assist industry and introduce those that would cost jobs and assist our competitors.

Mrs. Angela Knight: Does my right hon. Friend agree that the general agreement on tariffs and trade provides

important trade opportunities, not just for countries such as Britain but for developing countries? Removal of the trade barriers will give them the chance of export-led growth to benefit their economies and bring about prosperity.

The Prime Minister: Yes, I entirely agree with that. My hon. Friend will know that, at the Commonwealth conference, we agreed that a number of Commonwealth countries—including less-developed and developing countries—would send a mission to the main Governments around the world in the GATT negotiations, to ensure that there was a satisfactory settlement. I noticed yesterday that Malaysia, on behalf of the less-developed countries, had hailed the round as a victory for common sense.

Mr. Worthington: To ask the Prime Minister if he will list his official engagements for Thursday 16 December.

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Worthington: Why have the Government put 7p on income tax, or its equivalent?

The Prime Minister: The hon. Gentleman is clearly not very good at listening, or he would have heard the answer a good deal earlier, but I will tell him what the Government have done.
The Government have got interest rates down to the lowest levels for 16 years; inflation at the lowest level for 26 years; unemployment falling, while it rises everywhere else in Europe; growth that is faster than in any other country in Europe; a GATT deal to benefit industry; retail sales up; and a whole range of other economic improvements. That is the Christmas message to bring a smile to people's faces next year—not the misleading questions asked by the Labour party.

General Agreement on Tariffs and Trade

The Prime Minister (Mr. John Major): With permission, Madam Speaker, I would like to make a statement on the successful conclusion of the world trade negotiations.
In Geneva yesterday, trade negotiators from 117 countries reached the most wide-ranging agreement ever. After seven years of long, hard and often fraught negotiations, it is a superb outcome. It is a result for which industry, commerce and consumers alike have pressed; it is a conclusion for which this Government have worked tirelessly through many crises, when protectionism threatened British markets and British jobs.
The new GATT settlement will help British industry by bringing down barriers to exports of manufactured goods and services. It will give manufacturers greater protection against piracy of their copyright, patents and designs. It will bring down prices for consumers—particularly of food, electronics and other manufactured goods; and it will strengthen the world trading system against unfair practices by individual countries.
Britain is the fifth largest exporter in the world of goods and commercial services. We export more per person than either the United States or Japan. Our markets are already among the most open. We stand, therefore, to be one of the biggest gainers from cuts in worldwide tariffs, quotas and other restrictions.
Sharp reductions in some very high tariffs in the United States and Japan will help Britain in strategic markets. The overall tariff reductions, across all countries of the world, will be around 40 per cent. An independent study by McGraw-Hill has indicated that a new GATT agreement could add up to 4 per cent. to our national output, generating up to 400,000 extra jobs over the next decade.
The European economies, as a group, are estimated to be the biggest single gainer; so the GATT deal can be expected to give a much-needed boost to confidence and recovery in our biggest export markets.
As late as last weekend, there was a real and frightening danger that negotiations might unravel. The world faced a choice between a retreat into protectionism, slump and higher unemployment, and free trade, growth and jobs. Happily, the right choice has been made. The director general of the CBI has rightly called this outcome
a momentous and welcome event".
This Government have fought consistently to keep the negotiations going. It has been a long struggle. Last year, we faced the prospect not only of failure, but of a lurch into trade war between Europe and the United States.
Exports from Europe were threatened by new and punitive American tariffs. We were able to use our presidency of the European Community to get both sides back to the negotiating table and make progress on farm trade. We encouraged the new United States Administration to extend congressional authority in order to permit the GATT round to be concluded. We pressed for the agreement on tariffs at last summer's Tokyo summit —another crucial meeting and another crucial building block in the final result.
At this autumn's Commonwealth summit, we launched a special mission to all the key Governments of the developed world. This sent the clearest possible signal on behalf of one quarter of the world's population that free

trade was a prize for developing countries too. Trade, more than aid, is the most certain route to economic development.
I believe that very great credit is due to Sir Leon Brittan, the European Community's negotiator; and to Peter Sutherland, the director general of GATT. But others have played a crucial part, including the United States negotiator, Micky Kantor. All three had the courage to take on their tasks at a time when it was far from certain that they would be rewarded by success.
Let me outline the main features of the agreement. First, excellent progress has been made on industrial goods but final details are still being worked out. A number of our largest export markets will move towards the total abolition of tariffs in industries which include pharmaceuticals, steel products and spirits. For example, the Scotch whisky industry, which already has exports totalling about £2 billion a year, will benefit from the complete abolition of Japanese tariffs.
Cuts in high United States tariffs on scientific equipment, chemicals, steel and ceramics, for example, will help in one of our biggest markets. Our textile manufacturers will gain from tariff cuts in the United States, and gain greater access to many economies along the Pacific rim.
Secondly, for the first time agriculture will be fully covered by GATT rules. Tariffs are being cut and subsidies reduced substantially, offering families in this country the prospect of lower prices of staple foods. In Europe, we have already begun the process of reducing farm production subsidies. Overall, those subsidies cost every family around £20 a week. The changes to the common agricultural policy which are already agreed, should—if passed on to the consumer—over a period lead to price cuts equal to 20p off a pound of beef or 6p off a pound of butter. Under the GATT agreement, other countries—notably, Japan and the United States—will now have to cut their agriculture tariff subsidies as well.
Thirdly, for the first time we have an international set of rules for free trade in services—the fastest growing sector of the world economy. Services account for two thirds of our output in the United Kingdom but only about one quarter of our exports; so, if we can break down barriers to trade, there is great potential for growth. The services covered range from insurance to consultancy. Many countries have made commitments on financial, telecommunication and transport services. This is only a start. Further negotiations with the United States must follow on maritime and financial services. But in the meantime we have maintained the City of London in a position in which it will attract new international business.
Fourthly, with regard to so-called intellectual property, the law of the jungle still rules in too much of the world. Expensive research and development by British pharmaceutical companies can be pirated—in effect, stolen—by countries which offer no protection for patents. The same is true of Britain's record industry, which estimates that as much as half of its market in the developing world is stolen by pirates. For the first time, we now have an agreed set of international rules on which we can begin to rely in our fight to give these industries the markets which they have a right to expect.
Free trade increases the need for businesses to be internationally competitive, but in Britain, we have world-class companies ready for the challenge. This new GATT settlement removes the threat of collapse in the


world trade system—a system on which economic growth has been based for nearly half a century. It extends the benefits of trading rules into vast new areas of business. It brings further welcome reductions in tariffs on British goods. it is a platform for recovery, growth and jobs in Britain, the European Community and the rest of the world. I commend it to the House.

Mr. John Smith: I thank the Prime Minister for his statement. The Opposition also welcome the successful conclusion of the Uruguay round. It has been a long and torturous negotiation, but the result, although long overdue, is an important step forward for the world economy. Having had responsibility for the Tokyo round, I know how difficult and detailed such negotiations can be.
Preserving an open and fair trading system is vital for growth, jobs and prosperity not just in this country but round the world. The dangers of beggar-my-neighbour protectionism must always be resisted.
The GATT agreement is, however, only a start. Does the Prime Minister agree that, for Britain to succeed, we must put far more effort into promoting our export performance in manufacturing and services? Will the Government recognise that following the deal, it is now even more vital that we invest in people and in their skills to ensure that we succeed in international trade by competing on the quality of the goods that we produce and the skills of our work force rather than on low wages and a self-defeating spiral of low skills and poor job security?
On the details of the Geneva agreement, I welcome the new agreements on intellectual property, which tackle the piracy of counterfeit goods and provide security for British companies that invest in the research and development of new products.
On the failure to reach a settlement on trade in financial services, is it the case that access to trade in those services in the United States will remain restricted? That is clearly a matter of considerable concern to the financial services industry in Britain. What steps do the Government intend to take to push forward negotiations to include financial services fully within the GATT framework?
On the environment, will the new Multilateral Trade Organisation be given a remit to recognise the importance in the modern world of linking economic development with environmental protection?
What changes have been made to the Blair house agreement to accommodate French agricultural interests? Can the Prime Minister assure the House that the deal in no way prejudices the urgent need to continue to reform and control the costs of the common agricultural policy? In relation to the proposed MTO, which will supersede the GATT secretariat, are we satisfied with the procedures for trade disputes? Can we be assured that the MTO will cover concerns for environmental protection and fair employment standards?
Does the Prime Minister agree that steps should also be taken to strengthen the role of the International Labour Organisation, and in particular to encourage enforcement of its conventions on fair labour standards and especially to help stamp out child labour? Although we welcome the benefits to consumers at the prospect of reduced tariffs on textile imports, surely no one in this country wants to buy products made by children in sweatshops that have no concern for basic human rights.
Although GATT offers important trading benefits for the developing world as a whole, do the Government

recognise the special difficulties for Africa, which will probably gain little from this specific agreement? For that reason, can I urge the Government and the international community to do much more to reduce and write off the outstanding debts of the poorest countries? While trade is vital to the expansion of the world economy, can more be done to encourage new lending, investment and official aid so that all regions in the world can participate in the economic growth that we hope will occur?

The Prime Minister: Let me deal with the specific points that the right hon. and learned Member for Monklands, East (Mr. Smith) has raised.
On the question of promoting exports, I am delighted to tell the right hon. and learned Gentleman that, at present, our exports are running at record levels. As he will know, we have provided more extensive and cheaper export cover to assist our export promotion. We have reorganised most of our overseas postings to ensure that greater assistance is given to British business men abroad.
A large number of trade missions have been led by senior Ministers and others in the Government, most of whom have come back with substantial order books. At the moment, we are examining what further measures can be taken to provide an even better service for our exporters in the future. I have no doubt that, with the reduction of tariffs overseas and the increased scope in services and in manufacturing, there is a remarkable opportunity for British companies, at a time when they are competitive and in a position to take advantage of that opportunity. We shall certainly proceed with that.
I share with the right hon. and learned Gentleman the regret that we did not get further on financial services, because it was not possible for the various countries to agree on a final conclusion. Some progress has been made. The sector is now covered by trade rules and there have been a number of major gains for United Kingdom companies. For example, United Kingdom banks and insurance companies will be guaranteed the right to do business in Canada on the same basis as United States and Canadian firms, although it is disappointing that a fuller result for that sector has not been achieved. We have fought hard to ensure that openness in the European Community market will be maintained and we won that battle in Brussels.
There is no question that development will be at the expense of the environment, and I do not believe that anyone seriously imagines that that will be a problem.
There were detailed renegotiations on Blair house at the margins some time ago. There were no changes to the Blair house agreement as a result of the European Community meeting over the weekend and expenditure on the common agricultural policy will be restrained under the ceilings that were agreed at the Edinburgh summit, in terms of the financial perspective of the Community.
I do not have any quarrel with the outcome on the trade dispute mechanism. I do not have the same affection for the ILO as the right hon. and learned Gentleman—that is a difference between us, as I am sure that he knows—but I share his views about child labour—[Interruption.] I am about to tell the right hon. and learned Gentleman precisely what has been done about it, if he will listen. The activities of child labour lead to dumping. In the Community we have powerful mechanisms to act against dumping and they were improved so that action could be taken more


speedily at the Foreign Affairs Council yesterday, which was attended by my right hon. Friend the Foreign Secretary.
As for Africa, it is the view of the African states that this GATT round is of assistance to them. They made that perfectly clear at the Commonwealth conference where a large number of African states, both rich and poor— [Interruption.] Hon. Members may be interested to know that those members of the Commonwealth wholly support the outcome of the GATT round. The area of greatest difficulty, as the hon. Member for Hampstead and Highgate (Ms Jackson), who is not in her place, has said, is sub-Saharan Africa. As I said to the hon. Lady, if it turns out that the sub-Saharan countries face particular difficulty, our long historical connection means that we shall certainly do what we can to provide further assistance, both bilaterally and in other ways.
To ensure that they get further assistance with their debt, Opposition Members may be aware of the Trinidad terms initiative that I launched in 1989-90, which is by far the most generous write-off of debt that the world has ever seen. We have written off a large amount of debt under than and we are still pressing some people in the Paris Club to do so. I believe that we shall be successful. It is the view of the countries that benefit under those Trinidad terms that it is by far the most comprehensive and most generous write-off of capital and revenue debt that has ever been proposed and carried through.

Mr. Paul Channon: Is my right hon. Friend aware that it is a long time since the start of the negotiations, when I spent a happy week in Punta del Este with Mr. Alan Clark, among others? He has not yet described it in his diaries. May I congratulate my right hon. Friend and his colleagues on the achievements of the British delegation? I especially congratulate Sir Leon Brittan, as my right hon. Friend rightly did, and we must not forget Mr. Arthur Dunkel, who was the director general of GATT for many years, and who was a tremendous support in the early days of this round.
In agreeing with my right hon. Friend about the importance of the conclusions to trade throughout the world and to prosperity, may I ask him to say a little more about what will happen to financial services? At the start of the negotiations, the American delegation was among the keenest that there should be freedom of trade in financial services. What has happened? Are there now proposals to proceed with the negotiations at a later date in some other forum? What will happen on financial services? It must be very much in the interests of Britain, as well as of many other delegations, that the process should not come to an end and that further steps should be taken.

The Prime Minister: I agree with my right hon. Friend about that point. He is right in his supposition that there will be further negotiations on financial services; I hope that they can be carried forward speedily. It is unsatisfactory that we did not get further on financial services on this occasion. Having voiced that disappointment, I believe that one should not lose sight of the fact that this is by far the widest and most comprehensive world trade settlement, with large areas previously not within

GATT now brought within it. It provides for a much more liberal world trading system and it is the biggest single advance in free trade for many years.
My right hon. Friend speaks with some knowledge of the matter. He was Minister for Trade and President of the Council of Ministers during the early stages of the GATT round. I join in his congratulations to Sir Leon Brittan and to Arthur Dunkel. They can both be proud of what they have achieved.

Mr. Paddy Ashdown: The Prime Minister is right to say that this is a good day for the world and a good day for Britain. However, is it not the case that, for Britain to take advantage of increasingly open world markets, we shall have to do much more to build a high-value-added, high-investment, high-skill economy than has been done so far under this Government?
The Prime Minister is right to welcome the extensive debt write-off and the development assistance. However, if third-world countries are to have access to the opportunities that the end of the Uruguay round has presented, more attention will have to be paid to that area.
Many people will have greatly welcomed the Prime Minister's comment to the leader of the Labour party that he recognised that development damaged the environment. Does he, therefore, agree that almost the first task of the new Multilateral Trade Organisation should be seriously to consider environmental factors and the means by which we can incorporate environmental costs into the world trading system?

The Prime Minister: The fact that our exports are growing at a remarkable rate while overseas markets are very flat, especially in the European Community, suggests that to an extent greater than that for which the right hon. Gentleman gives them credit, our British exports are adding substantial value and are penetrating markets deeply as a result. One illustration is the German market. It is in substantial decline at the moment, yet British exports to Germany have increased; we have taken a much larger share of a much smaller market. That is substantially because of our competitiveness and because of the high-value-added nature of so many British exports.
There is sometimes a tendency—I do not attribute this to the right hon.gentleman—to think especially of manufacturing in the old sense of large, labour-intensive manufacturing industries. In the constituencies of almost every hon. Member, there are now small, medium and high technology businesses which are, in essence, manufacturing industries. They now export around the world, not least to such places as Japan, against very stiff competition.
I agree with the right hon. Gentleman about debt write-off. The original Toronto terms, introduced by Lord Lawson when he was Chancellor of the Exchequer, and the Trinidad terms have been well ahead of what the rest of the world was prepared to contemplate in terms of debt write-off at that time.
The right hon. Gentleman referred to the third world. One of the most comprehensive ways in which we can help countries in the third world is not to close our markets to their exports. That is why I welcome so much of the Uruguay round outcome. It opens markets to the third world to a far greater extent than ever before. The outcome is not perfect; it does not go all the way. However, it does


a great deal more than ever before and offers substantial incentives to third-world countries to develop their exports.

Mr. John Townend: I congratulate my right hon. Friend on the enormous effort that he has put into the agreement which is of great benefit to Britain. Does he agree, however, that there is considerable resentment in this country at the intransigence of the French, who demanded compensation for their farmers from the Community budget as a condition of agreeing to the GATT talks? Will he tell us how much that that will cost the EC budget, and what our proportion will be?

The Prime Minister: A number of countries during the round were pretty intransigent from time to time, although perhaps the difficulties faced in France got rather higher profile publicity than most. I know that the GATT agreement has caused the French Prime Minister considerable domestic difficulties. I do not particularly wish to add to them now. It is worth looking at what the agricultural agreement does: it reduces Community tariffs by 36 per cent. and cuts exports subsidies substantially. That was the essence of the Blair house agreement, and that has been maintained despite what may be said in other capitals.

Mr. Barry Jones: Where does the British aerospace industry stand? What is the fate of the airbus? Why was the issue of aerospace taken out of GATT? Is the vendetta by the American President against airbus now over?

The Prime Minister: The reason why those aspects of civil aviation were taken out of the round at the last minute was simply that agreement on them could not be reached. But the British aerospace industry will continue to be covered by the present Community and United States bilateral arrangements. That means that the position stays as it is now and that it has not—as the hon. Gentleman and many others feared—been worsened by the outcome of this round.
It has been agreed that the Community and the United States will now negotiate for another year. I should say, for it might reassure the hon. Gentleman, that the United States has agreed to negotiate on the basis of the GATT Committee chairman's draft text, which currently provides for a reduction in United States indirect support for its industry. The Commission, as our negotiator, will continue to insist on the inclusion of aero engines and indirect support. The outcome should protect United Kingdom interests. The hon. Gentleman need have no doubt that we will press our negotiators very firmly on that point.

Mr. Edward Garnier: My right hon. Friend will recall that my constituency in Leicestershire has many farmers and many people who are engaged in the knitwear, hosiery and textile industries. Does he recall that, following the Tokyo summit, he informed the House about his hopes for a reduction of the United States tariff barriers for British textiles? Will his hopes that we shared when he returned from Tokyo be realised following the GATT agreement? I join other hon. Members in congratulating him and his team, particularly Sir Leon Brittan, in their achievement.

The Prime Minister: The changes to the textile industry are helpful, but not as helpful as we expected them

to be when we returned from Tokyo. The changes since Tokyo have meant that the extremely favourable changes that we had then are now less favourable. Securing improved market access for our textile exports was a priority for us in the negotiations.
The agreement that the industry negotiated some months ago improved market access. We have been able to build on that in the Uruguay round and significant cuts have been agreed in a number of United States textile peaks. That is very valuable for our textile exporters and it is something that they have long sought. That is undiluted good news. It is not as good news as it looked as though it would be after Tokyo. Good news it is; superb news it is not.

Mr. Bob Cryer: Will the Prime Minister explain the phrase "unfair practices" which, according to his statement, are controlled under GATT? Does it, for example, include any control of child labour, or is he relying entirely on anti-dumping practices? He should know that, when dealing with the EC, most industries find it dilatory and inefficient in dealing with anti-dumping practices. Should not GATT have a social clause to give people in other countries health and safety at work rights, and trade union rights to ensure that they are employed under proper and decent working conditions? Are we not exploiting workers and child labour badly in order to receive their products in this country?

The Prime Minister: As I said in reply to the Leader of the Opposition, just today the Community improved its mechanisms for dealing with dumping, in terms of producing a more speedy response. I share the hon. Gentleman's view that, sometimes, across the Community, it has taken longer to respond to dumping than might ideally have been the case. I believe that that was corrected in the agreements made by my right hon. Friend the other day. We are trying to deal with the problem. The other circumstances that he set out lead to goods being produced and then sold at below the proper world market level. That is the definition of dumping, so I believe that we shall catch the practices about which the hon. Gentleman is concerned.

Mr. James Paice: I add my congratulations to my right hon. Friend the Prime Minister on what has been achieved, particularly in agriculture, heralding as it does the end of competitively subsidised dumping on the world market and, we hope, the gradual phasing out of price support and the iniquitous set-aside scheme with which we in Europe have got stuck. While I recognise that it was probably inevitable, although regrettable, that the French had to be bought off with extra compensation, if necessary, for their small farmers, will he ensure that not only does that not exceed the guidelines already laid down for expenditure but that it is not paid out at the expense of compensation already agreed for British farmers?

The Prime Minister: Perhaps I should make clear to the House what happened with the French over the weekend. No agreement to provide the French with what I saw described in one Sunday newspaper as "billions of pounds" was made last weekend. The agreement reached was that the ceilings on expenditure in the Community will remain as agreed at Edinburgh before the Blair house agreement was renegotiated. The view of the Commission,


and most of the member states, is that the GATT agreement is compatible with common agricultural policy reform, so the question of extra compensation will not arise.
Even if it were to arise, it is agreed that there is no question of increasing the sums of expenditure. It is a free expression to suggest that there will be billions of extra pounds for French farmers. That flatly is not the case. When asked, after the conclusion of the European Council, whether French farmers had won extra money during the Council, I replied, "Not a penny." I reply again, "Not a penny."

Mr. Derek Enright: I congratulate the Prime Minister on his recognition that sub-Saharan Africa will benefit little if at all from the GATT negotiations. That is a positive start. Will he look at the wretched rules of origin, which cause so many difficulties for such countries as Guinea-Bissau and Guinea-Conakry in terms of the export of their agricultural and fishery products?

The Prime Minister: I am not familiar with the details of that problem, but I shall seek advice on the rules of origin and have a look at them. To pick up the earlier point about the poorest countries—as I said, a large number of them are sub-Saharan countries—19 of them have benefited from the reduction of $1·75 billion of their debt, under the Trinidad terms.

Mr. Phillip Oppenheim: Is European culture really such a pathetic withering little flower that it needs protection by the state? If French films are so good, surely people will flock to see them without state intervention. While the role of Great Britain and the Prime Minister in securing the GATT round was crucial, is it not a shame, given that we believe in free choice and open markets, that we backed that French demand which, in whatever sophistry it is cloaked, is nothing more than an unpleasant combination of censorship and protectionism?

The Prime Minister: As my hon. Friend knows, we would have preferred to have reached an agreement on audiovisual matters. A number of others would have preferred such an agreement to be reached. It was not possible. In the circumstances, the only option to protect the gains in the round was to take the audio-visual matters entirely out of the GATT agreement. Like my hon. Friend, I regret that. I hope that we can negotiate a satisfactory arrangement soon.

Mr. Brian H. Donohoe: Given the Prime Minister's earlier answer to the question on the aerospace industry, can he tell us how small aircraft will be affected? There is a potential problem with Jetstream in the Ayrshire area. Will the Prime Minister assure us that that matter will be included in any negotiations with the United States?

The Prime Minister: Small aircraft and engines are included in the discussions. As I understand it, until those discussions are concluded there is no change from the present position.

Sir Michael Grylls: Does my right hon. Friend agree that this settlement of the GATT round comes at a crucial time to give the world economies that extra boost to get them moving again and that, as he has said, we shall benefit from it? Will he use his influence

as Prime Minister to continue to encourage through the export services with the President of the Board of Trade the many—rather too many—small and medium-sized companies that could but do not yet export? If their hand were held a little, they might do that much better.

The Prime Minister: On that last point, my right hon. Friend and his colleagues are making a special effort through the business link scheme to do precisely that. My hon. Friend touches on an important point. One should make it clear that the GATT round now having been agreed is not immediately implemented. There will be a ministerial signing session, probably in April 1994. The final Act will need to be ratified by a number of countries. Then it will come into force, probably in late 1995 but conceivably as late as the beginning of 1996.

Mr. Dennis Skinner: How can everybody be with us? There are 113 countries that have signed the agreement. Some are bound to be losers. Why does not the Prime Minister admit that the multinational companies are the driving force behind GATT? Britain will be gatted. Of the top 500 multinationals, 278 are either in the United States or Japan and the rest are divided between all the other industrial countries on the Pacific rim. It is a joke if the Prime Minister is trying to convey to the people of Britain that we will benefit. He said the same when the multinationals wanted the common market in 1973; unemployment increased. He said the same about the single market four years ago; again unemployment increased—

Madam Speaker: Order. This is not the time for speeches. This is the time for questions. If the hon. Gentleman has a question to put to the Prime Minister, he should do so and then sit down and let us hear the answer.

Mr. Skinner: Why does not the Prime Minister answer this question: since Britain's manufacturing base is now down to 4 million, how on earth can this country leap across the boundaries to increase production? Why does not the Prime Minister tell the truth about what he said about jobs the other day? When I asked him how many jobs had been created, he said 400,000. Already he has stretched the number.

The Prime Minister: The hon. Gentleman has taken leave of what passes for his senses. I said 400,000 the other day and I said 400,000 today. He should get his facts right for a change. He is wrong again on other matters. Not only is he wrong, but he does not seem to carry with him his hon. Friend the Member for Livingston (Mr. Cook) or the right hon. and learned Member for Monklands, East (Mr. Smith), who have said precisely the reverse.

Mr. Skinner: So what? [HON. MEMBERS: "Oh."] I shall be proved right.

The Prime Minister: If anybody else were as confident about anything as the hon. Gentleman is confident about everything, we would all be rather well off. I for once am prepared to make common cause with the hon. Member for Livingston. I entirely agree with him when, in welcoming the GATT trade deal, he said:
This will create substantial opportunities for developing countries.
Not only does the hon. Gentleman think that, and he is entirely right, but so do the developing countries. But they, of course, also know less about their interests than the hon.


Member for Bolsover (Mr. Skinner). If perhaps the hon. Gentleman had listened a little more carefully—he clearly did not listen the other day about jobs either—he would know that the developing countries in the Commonwealth sent a number of representatives to the main capitals to say how important it was for them to have a GATT agreement. Every single thing that the hon. Gentleman said was copper-bottomed, gold-plated rubbish.

Mr. Nicholas Winterton: I warmly welcome the successful outcome of the Uruguay round and pay tribute to the Government for the role that they have played in bringing it to a successful conclusion. Does my right hon. Friend accept that there is a downside to this agreement—he referred to it when answering some supplementary questions earlier? Does he accept that, if Britain is to be successful and competitive, it is important that for industries such as textiles and clothing—I could name others—the Government assist by providing an investment incentive? Will my right hon. Friend and my right hon. Friend the President of the Board of Trade do what they can to put pressure on the Treasury to ensure that there are incentives for investment so that British industry can take advantage of the Uruguay round and its successful outcome?

The Prime Minister: We certainly wish to ensure that British manufacturing industry both invests and exports. While my hon. Friend is right that the outcome for the textiles industry was less satisfactory than we had hoped it would be some time ago, the successful conclusion to the round does include a reduction in tariffs in the United Kingdom's main export textiles markets, most crucially, of course, in that of the United States. Therefore there is a better circumstance for textiles, but, as my hon. Friend implied, it is not as good as we had hoped it would be.

Mrs. Margaret Ewing: Does the Prime Minister accept that there will be a general and warm welcome for the decision to reduce tariff barriers against Scotch whisky—an important, high-quality export-winning product, not least in my constituency, where so many jobs depend on it? Is the Prime Minister aware that there is a need to build on the agreement to eradicate the internal excise discrimination in Japan, which continues to breach the 1987 GATT agreement because shochu is protected by a much lower level of tax than Scotch whisky? I believe that the differential between the two products ranges between six and nine.

The Prime Minister: The hon. Lady is right on both points. The tariff reduction on whisky in Japan is from 250 per cent. to zero—it has gone entirely. That is only part of the barrier against Scotch whisky exports in Japan. There are still substantial internal tax barriers. I raised those with Prime Minister Hosokawa when I was in Tokyo some time ago and we wrote to him again last week. We hope to see some movement in the comprehensive tax reform that the Japanese Government are now planning. The present position on internal tax discrimination against Scotch whisky is not satisfactory, and the Government continue to pursue it with the Japanese Government.

Mr. Iain Duncan-Smith: I congratulate my right hon. Friend on the successful conclusion to the GATT round, which is a great success for Britain, particularly Conservative Britain which believes and is foremost in free trade. May I press my right hon. Friend on

the common agricultural policy? We all believe that the CAP is far too heavy and costs far too much. In many respects, that may have restricted our negotiating position on the financial services area. Will he assure hon. Members, particularly Conservative Members, that we will now press further for greater reductions and a greater freeing of the financial services business in the world?

The Prime Minister: We shall certainly press for greater freeing of financial services. It is very much in our interests. We are one of the world's great providers of financial services, and the more that we can open up European markets—which is now happening—and Japanese and United States markets in particular, the greater the opportunity for the export of British financial services. My hon. Friend is quite right: it is a matter of critical interest to us and I give him my undertaking that we shall pursue it.

Mr. Alan Simpson: May I pursue the downside a bit further and refer the Prime Minister to the McGraw-Hill study that he mentioned earlier? What did the study say about identifying the sector of British industry that can now anticipate job losses, and what will be the scale of those job losses?

The Prime Minister: As the hon. Gentleman knows, the net position is estimated to be a growth over 10 years of around 400,000 jobs. Beyond that, it is not really possible to identify in any great detail where there will be growth and contraction. That depends on too many factors for the statistics to have any real value. The calculation of 400,000 jobs is derived from the growth of world trade generally and the implications that that will have for manufacturing industry and the service sector in particular.

Mr. Richard Alexander: I compliment my right hon. Friend on his mastery of his brief this afternoon. Many countries gain an unfair competitive advantage by subsidising their exports. Did the new GATT settlement deal directly with that hidden barrier to free trade?

The Prime Minister: Yes, there are new rules on subsidies, anti-dumping and safeguard action. There are texts in all those areas to deal with unfair practices. They are a good outcome for Britain in particular, and the EC more generally. Disciplines, including a reasonable constraint on developing countries, have been tightened, but the texts are a great improvement on the current GATT rules.

Mr. John McAllion: If, as the Prime Minister claims, the Government champion free trade as a means of helping the developing world, why did Britain abstain in the recent overwhelming vote at the United Nations condemning the United States Government for its illegal and inhuman economic blockade of the Republic of Cuba?

The Prime Minister: I am not sure that the hon. Gentleman is comparing like with like. I do not know of any country that would deny that this Britiash Conservative Government is one of the most free-trading Governments, in philosophy and practice, of any Government in the world. I am pleased to see the hon. Member for Middlesbrough (Mr. Bell) nodding in agreement. He may not necessarily approve, but he does agree.

Mr. Phil Gallie: Will my right hon. Friend accept my congratulations on his outstanding statesmanship during the past two days? Does be accept that his earlier comments on aviation policy suggest that the advantage of current levels of launch aid for aircraft manufacturers who manufacture planes of 100 seats or fewer will remain despite strong USA pressure to do away with that? Does he further accept that my constituents will warmly welcome that on the basis that Jetstream Aircraft is a manufacturer of turbo-prop aircraft?

The Prime Minister: I can confirm that there will be no change and I reiterate that the Commission will continue to insist on the inclusion of aero engines and indirect support. As I said a moment ago to the hon. Member for Cunninghame, South (Mr. Donohoe), the outcome should be to protect the legitimate interests of the United Kingdom industry.

Mr. George Stevenson: I share the Prime Minister's relief at the outcome of the GATT negotiations and his view of the need to reduce support and subsidies for agriculture, but how does that square with the fact that, on 15 November this year, the Government agreed to an increase of half a billion pounds in the draft EC budget for 1994, most of which will subsidise agriculture? Will the Prime Minister give us a clear commitment that there will be no extra support for French agriculture, either within the guideline or otherwise, and that, if there is any prospect of such support, it will not be transferred from other areas of the EC budget, such as the structural fund that is designed to encourage employment?

The Prime Minister: A number of other countries apart from the United Kingdom, such as Spain, Portugal and Greece, would strongly resist any suggestion that money to support agriculture should come from the structural or cohesion funds. In our discussions at the weekend at the European Council, Prime Ministers of some of the southern states made it perfectly clear that, were there any suggestions from any of the northern states-it would

certainly not come from this northern state—that money to fund agriculture should come out of the structural or cohesion funds, they would strongly oppose that, and they would be right to do so.

Mr. Jacques Arnold: Is not the consequence of the GATT that third-world countries will be able to earn far more foreign exchange for themselves and therefore far more self-respect? Is not that better than the begging bowl approach so favoured by the Opposition?

The Prime Minister: Yes, my hon. Friend is right. Independent calculations are that the gain to developing countries from opening markets under these GATT round considerations will be greater than the total amount of aid from all the western democracies and Japan added together.

Mr. Roy Hughes: With all the euphoria following the GATT, may I remind the Prime Minister that, some ten years ago, there was a traumatic upheaval in the British steel industry, when many thousands of people were made redundant and whole communities were decimated? The same development does not appear to have taken place in Germany, France or Italy, where subsidies still abound. When will the Government take firm action to look after our steel industry and prevent further redundancies?

The Prime Minister: I am surprised that the hon. Gentleman did not draw the conclusion that most other people would have drawn, which is that British Steel is now a world-class company trading profitably because it is under private ownership. I hope, therefore, that there will be a good deal of support from Opposition Members in future for the privatisation of industries. The large number of industries that were in the public sector and very expensive to taxpayers are now in the private sector yielding resources to taxpayers.

Several hon. Members: rose—

Madam Speaker: Order. I am sorry, but we must now move on.

Business of the House

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): With permission, I should like to make a statement about the business for the first week back after the Christmas Adjournment.
TUESDAY 11 JANUARY—Second Reading of the Criminal Justice and Public Order Bill.
Money resolution relating to the Non-Domestic Rating Bill.
WEDNESDAY 12 JANUARY—Proceedings on the Non-Domestic Rating Bill.
Motion on the Insider Dealing (Securities and Regulated Markets) Order.
THURSDAY 13 JANuARY—Opposition Day (First Allotted Day). There will be a debate on an Opposition motion, subject to be announced.
FRIDAY 14 JANUARY—Private Members' Motions.
The House will also wish to know that European Standing Committee B will meet at 10.30 am on Wednesday, 12 January to consider European Community document No. 6625/93 relating to special rehabilitation support programmes in developing countries.
In the spirit of Christmas, not to say Jopling, even though neither has been much in evidence this week, it may assist the House to know that, subject to the progress of Bills, it will be proposed that the House should rise for the Easter Adjournment on Thursday 31 March, until Tuesday 12 April.

[Wednesday 12 January:

European Standing Committee B—Relevant European Community document: 6625/93, Overseas Aid.

Relevant European Legislation Committee Reports: HC 79-xxxiii (1992–93); HC 79-xxxix (1992–93).]

Mrs. Margaret Beckett: I thank the Lord President for fulfilling his undertaking to give us an Opposition day in the new year, and the dates of the Easter recess. Will the Lord President warn the Home Secretary that, when it comes to debating the Criminal Justice and Public Order Bill, Members on both sides of the House, with the exception of the hon. Member for Gravesham (Mr. Arnold), will be anxious to discover whether—contrary to assurances that the Home Secretary seemed to give in the Queen's Speech—the Government intend to use that Bill to make sharp cuts in the compensation paid to victims of criminal violence? It will be of particular concern, at least on this side of the House, if we discover that Ministers have misled the House on such an issue.
Will the Lord President confirm that his announcement about the handling of the Non-Domestic Rating Bill implies that the Bill will be put through all its stages in one day without agreement? The Opposition regard that as a further dangerous precedent, all the more so because it is completely unnecessary.
We recognise that the Bill may not be controversial —although, as it has not yet been published, we must trust the Government on that matter. However, it will affect every British business. Whatever problems hon. Members may have in scrutinising such legislation, people outside suffer most when Bills are not handled properly.
I remind the Lord President that, of the last two Bills on this subject, one was given 13 days in this place and six weeks in all, and the second 15 days and two months in all,

from start to finish. There are still three months before this Bill needs to be on the statute book, so, on the basis of experience, the argument that there is some pressure does not stand up.
I am convinced that many people in local authorities and in business will not thank the Government for this speed. The Bill will hardly be here before it is gone again, and they will have had no time to look at it.
May I ask the right hon. Gentleman, finally, to press the Secretary of State for Social Security to come here as soon as possible to respond to the Select Committee report on the Child Support Agency? Does he realise that Christmas is being ruined for thousands of British families because of fear and uncertainty caused by the operations of that agency? It really is not good enough for the Government to drag their feet over this.

Mr. Newton: I assume that the right hon. Lady's thanks for the Opposition day debate were also made in the spirit of Christmas, for which I am grateful.
The White Paper giving details of the new tariff scheme for criminal injuries compensation—to answer the right hon. Lady's point about the Criminal Justice and Public Order Bill—was published yesterday, and doubtless she will have studied it. Our scheme is the most generous in the world. I understand that we pay more than all other European Union countries put together.
As for the Non-Domestic Rating Bill, local authorities are under a duty to send out their bills in good time, and it is important that they know in good time what bills they are to send out, so as to avoid uncertainty for businesses and to avoid the risk that authorities might send out bills on one basis and then have to send out another set of bills on another basis. I do not accept the right hon. Lady's presumptions about the leisurely way in which the House can deal with this matter. It is our hope that the House will deal with all stages of the Bill on Wednesday 12 January.
The last such Bill took only two and a half hours on Second Reading and 20 minutes for its remaining stages—that is to say, less than three hours. On the proposal that I have announced this afternoon, there would be about twice that much time. We shall see whether the Labour party wishes to proceed in a way that meets the convenience both of business and of local authorities.
The right hon. Lady will know that the Secretary of State for Social Security is carefully and urgently examining the report of the Select Committee on the agency—and other representations that he has received but —I cannot at this moment give an undertaking about the timing of a statement.

Mr. Paul Tyler: Is the Leader of the House aware that it is now nine months since we had a debate on agriculture? Did he note that, during the Prime Minister's statement on GATT and subsequent questions, there was no mention of the effect on farms, farmgate prices or farm incomes? Is he aware of the considerable concern among all hon. Members about the likely impact on agriculture of the GATT deal, whatever its other benefits?
Will the right hon. Gentleman assure us of an opportunity to debate early-day motion 134, standing in the names of members of my party and dealing with the hill livestock compensatory allowances?
[That an humble Address be presented to Her Majesty, praying that the Hill Livestock (Compensatory Allowances)


(Amendment) (No. 2) Regulations 1993 (S.I., 1993, No. 2924), dated 29th November, 1993, a copy of which was laid before this House on 30th November, be annulled.]
He will know that many Members from the hill areas are anxious about the effect of all these proposals on hill communities.

Mr. Newton: I shall of course bear the hon. Gentleman's request in mind. There may be some opportunity to discuss with his party how to handle the matter, although, at the moment, because of the Labour party's position, it is not open to me to discuss it in the usual way through the usual channels. I understand his point, and I will take it into account.

Mrs. Edwina Currie: May I welcome the announcement that the Criminal Justice and Public Order Bill is to have its Second Reading on the first day back? Is my right hon. Friend aware that a number of us hope to table a Back-Bench amendment to the Bill on the age of consent for homosexual acts, as we wish to see that changed? Could my right hon. Friend tell me whether it will be possible, under the long title of the Bill, so to do with an amendment that will be in order? Can he assist us by telling us whether we can have a full day's clear debate on this important issue, with free votes at the end?

Mr. Newton: Madam Speaker, you at least will have registered that my hon. Friend, in her characteristically engaging way, is inviting me in one answer to usurp your prerogatives and those of the Chief Whip. I hesitate to do so, but I am sure that you and he will take account of her request.

Mr. Peter Hardy: Is the Leader of the House aware that yesterday's GATT announcement, on which we have just spent a great deal of time, coincided with the announcement of further appalling job losses in the special steel works of South Yorkshire, which are among the best in the world? Is he aware of any concern among his colleagues on the Treasury Bench about the fact that those job losses have been caused by the subsidy of our German and Spanish competitors? Those competitors, with their Governments, seem determined to take out our superior capacity, despite the existence of the powerful weapons to which the Prime Minister referred.
Do not the right hon. Gentleman and his colleagues understand that, as our vital and strategically important industrial base disappears, this country will become little better than a banana republic, and that most people will not be able even to afford tropical fruit?

Mr. Newton: I do not for a moment accept the points which the hon. Gentleman made towards the end of his remarks. He will know that the Government have made clear their views about the issue of subsidies to other steel industries within the European Union. He will also know of the range of measures which the Government have taken, the most recent being their efforts to achieve a successful outcome of the GATT round. That is designed to improve the competitiveness of this country and the opportunities for our production to be exported.

Sir Peter Emery: In the spirit of Christmas, as invoked by my right hon. Friend, will he save me from being pestered by the press and ensure that the Government

give some response to the first report of the Procedure Committee on the Select Committee structure for Northern Ireland, which was published in the first week of December? Would it not be helpful if my right hon. Friend could ensure that the Government did something about it as soon as possible?

Mr. Newton: First, I express my gratitude—and, I am sure, that of the House—to my right hon. Friend and the Committee for the work that they did, not just on that report but on the Committee's earlier reports on these matters.
I am happy to inform my right hon. Friend and the House that, having regard to the report's conclusions, the Government have decided to embark on consultations with other parties on the basis that the time for a Northern Ireland Select Committee has now come. The House will be made aware of the outcome of those consultations in due course. In the meantime, I am sure that the House will welcome the intention to increase parliamentary accountability for the affairs of Northern Ireland.

Mr. Alfred Morris: Since it was the Leader of the House's PPS who prevented the House from debating Ferranti—a tragedy that puts at risk many thousands of jobs—will he arrange for a ministerial statement before we rise? Clearly there would have been a ministerial statement in that debate. Can we have that statement before the close of play tomorrow?

Mr. Newton: I cannot give any such undertaking to the right hon. Gentleman. I would make the point that my hon. Friend the Member for Hendon, South (Mr. Marshall) was also denied an opportunity of debate by the tactics which were pursued by the Opposition earlier in the evening. I understand that the Chair pointed out at the time that what my hon. Friend did—he is as entitled as any other hon. Member to the procedures of the House—was no more than what had been done by the hon. Member for Bolsover (Mr. Skinner) on Friday.

Mr. Peter Atkinson (Hexham): Will my right hon. Friend find time for a debate on the actions of British Coal at Wearmouth colliery in Sunderland? British Coal closed the pit and offered it to be leased to the private sector. However, British Coal is daily making the pit less attractive to private colliery companies by removing vital roof supports and coal-cutting equipment for which British Coal can have no possible use.
Although British Coal does not understand it, the colliery has a bright future in the private sector, which would safeguard jobs in the mining engineering industry in my constituency, and lead to the re-employment of many colliers in Sunderland.

Mr. Newton: That is an operational matter for British Coal, which has given assurances that no equipment will be removed unnecessarily. In view of my hon. Friend's concern, I will draw his point to the attention of my right hon. Friend the President of the Board of Trade.

Mr. Jeremy Corbyn: May I draw the attention of the Leader of the House to early-day motion 284 concerning the life of Manuel Salazar, who is on death row in the United States?
[That this House is appalled that the death penalty has been passed on Manuel Salazar, a Mexican American, following the death of a police officer at Joliet, Illinois, in


September 1984; notes that Salazar was unarmed and had been beaten by the police officer who subsequently died when his own gun went off; notes that after Salazar fled to Mexico he was illegally and forcibly returned to the United States of America where he was sentenced to death in 1985; notes that the Illinois Supreme Court is to hear arguments for a re-trial following the emergence of new evidence but is disturbed that the Attorney General is opposing this and asking for an execution date to be set; is further disturbed that his case is also before the Mexican courts for violation of his rights there by US agents; and therefore requests his release and return to Mexico.]
Does he recognise that many people in Britain are revolted by the prospect of the execution of a man who was illegally brought from Mexico to the United States? Will he convey that concern to his right hon. Friend the Foreign Secretary, so that the revulsion of millions of people in Britain at the use of the death penalty can be passed on to the United States Government?

Mr. Newton: I will certainly bring those sentiments to the attention of my right hon. Friend the Foreign Secretary, but so far, in all the circumstances, the British Government have not considered it appropriate to seek to intervene in that particular case.

Mrs. Jacqui Lait: My right hon. Friend will be aware that at least two Labour Members have cited GATT as a reason for debate on other subjects. As it is so important to the British industrial sector, will he give us some idea of when we will have a debate on GATT itself?

Mr. Newton: I cannot at present give my hon. Friend such an indication. Obviously, we will have to consider that, in looking at the business after the first week back that I have announced this afternoon. I will bear her request in mind. Meanwhile she may like to note that right hon. Friend the President of the Board of Trade will be answering questions on the first Wednesday back.

Mrs. Anne Campbell: Will the Leader of the House consider finding time for a debate on water quality and the cost of cleaning up the water supply? Many of my constituents are concerned not only about the cost of water but about the subsidiarity arrangements recently negotiated by the British Government, which they feel will lead to a reduction in the quality of their drinking water. It is an extremely important issue.

Mr. Newton: The hon. Lady is labouring under some misapprehension if she thinks that the consequence of decisions in the subsidiarity context is expected to reduce the quality of British drinking water, which is very high. The issue is the pace at which further improvement can be assessed in a way that is manageable for the industry, not least for the consumers who have to pay for them.

Mr. Harry Greenway: Bearing in mind that there are more manufacturing jobs in the London borough of Ealing than in any other London borough, may I again press my right hon. Friend for a debate rather than a statement or questions and answers on GATT, as it has central importance to jobs in my constituency and the borough I represent?

Mr. Newton: My hon. Friend manifestly can press me, and has pressed me, on that issue. I will, of course, take account of his pressure, but I cannot respond more than that this afternoon.

Rev. Martin Smyth: May I welcome the response of the Leader of the House to the question from the Chairman of the Procedure Committee? In the season of good will when there is great emphasis on the needy, can we have a debate in the very near future on our overall contribution to the Overseas Development Agency, bearing in mind there is still great need in the developing countries despite the hopeful bonus from the GATT?

Mr. Newton: Many people on both sides of the House would welcome an opportunity to debate that subject. Again, I will bear it in mind, but I cannot at this moment give any specific undertakings.

Mr. Nigel Evans: Is it possible to have a debate on the antics of Labour-controlled Lancashire county council, which is currently instigating a judicial review to prevent the local Government inquiry into the structure of local government from proceeding? The action is being driven by the leader of Lancashire county council, who is power-mad and waving the charge payers' cheque book around. It is estimated that the cost may be about £500,000, when that local authority is for ever saying how strapped it is for cash. We should have a debate as soon as possible.

Mr. Newton: I hope that my hon. Friend's remarks will be registered by those in Lancashire who in due course will have further opportunities to vote in local elections. Meanwhile, the Government have successfully resisted the application for an injunction. The review programme is unchanged, the reviews are going ahead and we shall certainly contest Lancashire's arguments for judicial review.

Mr. John Denham: May I draw attention to early-day motions 260 and 261?
[That this House notes the SIB inquiry into the mis-selling of personal pensions to members of occupational pension schemes, but also notes with concern that a third of all personal pension schemes are cancelled within two years leading to the loss of investors' savings, that many individuals have been encouraged to opt-out of SERPS for inappropriate personal pensions, and that the churning of investment schemes including endowment mortgages, has been widespread in recent years leading to further losses for savers; and, therefore, urges the Government to establish an inquiry into the regulation and management of the personal financial services industry.]
While today's news that the Treasury Select Committee will investigate the sale of personal pensions to occupational pension scheme members is welcome, does the Leader of the House accept that that is just the tip of the iceberg? Some £200 million a year of savers' money has been lost through the early cancellation of pension funds, and there has been a widespread mis-selling of personal pension schemes to members of the state earnings-related pensions scheme. Will the Leader of the House find an early opportunity for a major debate on the regulation and management of the personal and financial services industry?

Mr. Newton: The hon. Gentleman takes a close interest in these matters, and he knows that the extent of non-compliance is being thoroughly investigated by the Securities and Investment Board. A proper time for such a debate would be when we have the results of its inquiries. The board has the full support of the Government in its inquiry, and the Chancellor has made it clear that he expects the review to be conducted quickly, and appropriate remedies put in place.

Mr. Andrew Robathan: Will my right hon. Friend find time in the near future for a debate about the responsibilities of employers for employees? I am a member of the Employment Committee and I am not bothered if I have to remain in the House until 4 o'clock in the morning, but the staff of the Palace of Westminster were also kept here until 4 o'clock this morning by the machinations of Opposition Members. The business being conducted was so important that at least 30 or 40 Opposition Members bothered to remain until 3 o'clock:

Madam Speaker: Order. I cannot understand what the hon. Gentleman is asking for. Will he make his point clearly to the Leader of the House?

Mr. Robathan: I am asking for a debate on the responsibilities of employers towards employees, to ensure that female recorders and women who work in the Tea Room are not kept in the House until the small hours of the night by the machinations of Opposition Members. We had one hour's nonsense from one hon. Member, and another Opposition Member claimed to see strangers. He should get more glasses. It is hypocritical of the Opposition to say that they care about the rights of employees. They do not consider the rights of the employees of the House, but treat them all in a cavalier fashion.

Mr. Newton: I hope that members of the Opposition Front Bench, and other Opposition Members who contributed to those proceedings, will consider what my hon. Friend has said. I regret the inconvenience caused to the staff of the House—not least because the public outside will regard it as not a very sensible way for the Opposition to behave and for the House to conduct its affairs.

Mr. Denzil Davies: Returning to the question of GATT, will the Leader of the House give an assurance that that very important treaty will be debated? It is extraordinary that the French Parliament and the United States Congress can debate and vote on it. Surely the House can at least debate it?

Mr. Newton: I have made it clear that I will bear in mind the various requests that have been made for a debate on GATT. I do not dismiss them, and I will take into account what the right hon. Gentleman has said.

Mr. Peter Luff: Will my right hon. Friend find time for an early debate on the economic and social implications of investment in transport infrastructure? This would enable me to draw attention to the real economic advantages that the widening of the M5 has brought to my constituents in Worcester, and also the disadvantages it has brought to its neighbours in the villages of Whittington and Norton as a result of the noise generated because of inadequate soundproofing on the motorway.

Mr. Newton: I will draw my hon. Friend's remarks to the attention of my right hon. Friend the Secretary of State

for Transport. I know from experience in my own constituency that one of the problems with road schemes is that, when advantages are brought to one part of an area, disadvantages are brought to another. But I cannot promise an early debate on that matter.

Mr. George Foulkes: Will the Leader of the House, over the Christmas recess, look at the arrangements for Question Time? He will have seen today that neither the Chancellor of the Exchequer nor the Prime Minister answered questions directly, particularly the questions about the £9 a week increase in taxes for the average family. Instead, they started asking questions of the Leader of the Opposition and the shadow Chancellor. That was quite ridiculous.
I have been in the House for fourteen and a half years, and I have seen Question Time deteriorate. I go to seminars for the Commonwealth Parliamentary Association and tell the Members of Parliament of newly democratic countries that Question Time is the time when the Executive is accountable to Parliament. That is clearly less and less the case. Will the Leader of the House look into the matter and report to the House when we come back in January?

Mr. Newton: My right hon. Friend the Chairman of the Procedure Committee not long ago undertook some consideration of questions. [HON. MEMBERS: "Answer the question."] I am about to. I was here when my right hon. Friend the Prime Minister was answering questions. I thought his answers were a model of precision and clarity. I have never heard the Leader of the Opposition answer any question at all.

Mr. Bob Dunn: The House would welcome an early opportunity to debate local government in inner London. Many of my hon. Friends would welcome an opportunity to demonstrate that the worst councils—in terms of empty houses, poor collection of the council tax —[HON. MEMBERS: "Rates."]—and the provision of services—are councils controlled by the Opposition parties. They are a nightmare for the people of London.

Mr. Newton: My hon. Friend makes an excellent point, and the reaction of Opposition Members shows the embarassment they feel when complaints are made. I will look for an early opportunity to debate the matter, but not before Christmas.

Mr. David Winnick: As to criminality, will there be a statement from the Home Secretary about why a person being deported from the United States —who is unfortunately a British citizen—will be allowed to come here? That person is being deported because he was involved in Nazi mass murders and the killing, in April 1942, of two Soviet prisoners, apart from other things.
It is not wrong that Britain should be considered a safe haven for such war criminals? Bearing in mind the fact that the chances of a prosecution under the War Crimes Act 1991 are remote, his United Kingdom citizenship should be cancelled and he should be told that under no circumstances will we allow British soil to be contaminated by his presence.

Mr. Newton: The hon. Gentleman knows the answer. That person is a British citizen, and we have no choice but to accept him if he returns here. Any allegations that he has


committed criminal acts will be investigated in the same way as allegations against any other British citizen. That is the right way to approach the matter.

Mr. David Lidington: Will my right hon. Friend find time, early in the new year, for the Secretary of State for Transport to report to the House about the outcome of his Department's review of the crossrail project? I hope that the Crossrail Bill will be able to proceed without delay through the remainder of its Committee stage.

Mr. Newton: I will bring my hon. Friend's request to the attention of my right hon. Friend.

Mr. Paul Flynn: Will the Leader of the House give some Christmas cheer to my embittered constituent Kevin James, who, when he was a serving soldier in Northern Ireland, was severely injured in a bomb blast which killed his companion, Bombardier Wells, and two children? He has had a demand from the Child Support Agency for £1,000, and it has doubled his maintenance payments, which he cannot pay because he has no disposable income.
Can we have a debate on the agency so that I can ask the Prime Minister why, in Mr. James's terms, when he has put his life on the line "for people such as John Major", he is now being ruined by the same man? How is he going to help his ex-wife if he can no longer afford to travel to the north of England to see his children or to buy them Christmas presents?

Mr. Newton: As the hon. Gentleman will understand, I am not in a position to comment on a specific case. He will have observed, however, that my right hon. Friends the Secretary of State for Social Security and the Minister for Social Security and Disabled People are both present; I am sure that they will look into the matter.

Mr. Michael Fabricant: Will my right hon. Friend allow some time early in the new year for a debate on procedures of the House, particularly to discuss the methodology by which the Opposition parties could put down amendments to Treasury motions? Clearly, the whole issue needs to be simplified for those on the Opposition Front Bench.

Mr. Newton: I have already said that it might be appropriate for someone to run a seminar for the Opposition dealing with the tabling of amendments to Budget motions. [Interruption.] I am not sure whether it would be appropriate for me to do that; but those who now sit opposite me muttering may care to seek further advice.

Mr. Gordon Prentice: Does the Leader of the House recall the critical remarks made by his hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh), who accused the Prime Minister of political funk for sitting on the report on the privatisation of the Post Office for more than a year? Is it not a tragedy that the chairman of the Post Office has felt it necessary to speak out publicly, and in a highly critical way, against the Prime Minister and the Government, because of the drift and uncertainty surrounding the Government's proposals for the future of the Post Office?
Is this not the clearest possible example of circumstances in which a debate is urgently required—in this instance, a debate on the future of a national institution?

Mr. Newton: As the hon. Gentleman is aware, the Government's position in relation to the review of the Post Office, and the consideration that they are devoting to it—which, clearly, must be conducted very carefully—is well known. I do not propose to add anything further this afternoon.

Mr. Jacques Arnold: May I thank my right hon. Friend for providing, in considerable detail, the programme for the first week after our return in January? Would it not have been equally helpful to hon. Members if the subject of Thursday's debate had also been announced by the right hon. Member for Derby, South (Mrs. Beckett)?

Mr. Newton: Yes, it would. It would also have been quite nice if someone had thanked me for my early warning of the dates of the Easter recess.

Mr. Bruce Grocott: The Leader of the House has announced a three-week Christmas recess. Will he spend at least one day of that break brushing up his knowledge of parliamentary procedure, of which he has shown a worrying lack of grasp in his answers today—especially in his response to my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), who referred to the Prime Minister's poor performance at Prime Minister's Question Time?
The right hon. Gentleman said that, in all his time as Leader of the House, he had never heard the Leader of the Opposition answer a straight question. Will he try to understand that the Prime Minister's function is to answer the questions, whereas the function of the Leader of the Opposition is to ask them? May I make him fully aware that any Opposition Member would be delighted to swap places whenever he likes? We will answer the questions, and we will form the Government of the country, and we will answer those questions incredibly more effectively than the right hon. Gentleman does now.

Mr. Newton: Not for the first time, the hon. Gentleman is all over the place. I did not have in mind the role of the Leader of the Opposition at Prime Minister's Question Time; I am well aware of the position in that regard, and I understand what the hon. Gentleman was saying. I have sat through a good many debates during which the right hon. and learned Member for Monklands, East (Mr. Smith) has been asked how he would pay for his spending programmes, and I have never heard an answer.

Mr. Bernard Jenkin: Will my right hon. Friend consider making time available for a full debate on the methods by which the House makes the European Community accountable to Parliament, and to the Parliaments of the other member states? Is he aware that, when European Standing Committee B—of which I am a member—meets on 12 January, it will discuss a motion relating to the special rehabilitation support programme, and a document that will already have been agreed in the Council of Ministers? Any opinions that we express to the Minister therefore cannot be taken into account.
Does my right hon. Friend agree that that is not satisfactory? Do we not need to review the way in which we scrutinise the huge quantity of legislation that flows out of the European Community, so that we can have the Europe of nation states that the Prime Minister wants, rather than being dragged into a federal system?

Mr. Newton: My hon. Friend will be well aware that, in recent years, substantial improvements have been made in the way in which such matters are conducted, in order to improve accountability. Obviously, I would not rule out further improvements if there are clear ways in which they can be made. Meanwhile, my hon. Friend might have welcomed the clear gains represented by the further progress made very recently at the Brussels Council in giving reality to the concept of subsidiarity.

Mr. Thomas Graham: Will the Leader of the House arrange for a statement to be made—either by the Secretary of State for Health, or by the Minister responsible for health in Scotland—regarding a letter that I have received from a junior Minister, the hon. Member for Eastwood (Mr. Stewart), who is Parliamentary Under-Secretary of State for Scotland?
According to that letter, incinerators in national health service hospitals—or trust hospitals—can now possibly be used to burn commercial or toxic waste. Will the right hon. Gentleman arrange for a ministerial statement to clarify the matter, and to back up what the Minister said? I understand that he has now denied it to certain newspapers. I am concerned about that, because I have a letter in which he says clearly, in black and white, that those hospital incinerators can now burn toxic waste commercially.

Mr. Newton: I will bring that request to the attention of my right hon. Friend the Secretary of State for Scotland. I am sure that he will seek to reassure the hon. Gentleman in any way he can.

Mr. Iain Duncan Smith: First, may I thank my right hon. Friend profusely for giving us advance warning of the business that we will debate when we return?
Two weeks ago, when we were given notice of a debate prior to the meeting of the European Council, I told my right hon. Friend that I thought there would be a problem because not all the documentation was available, and that in any case there was a huge amount to study before the debate. As he will recall, last Thursday it turned out that some of the main documentation had not arrived until Wednesday afternoon—which gave us less than a day in which to study a 7 in pile of documentation.
I suspect that, if he looks at Hansard, my right hon. Friend will agree that the quality of the debate was very poor—with some exceptions. People had not had enough time to study the documents. Will my right hon. Friend take account of that, and look for some way in which we could have acquired that documentation earlier?

Mr. Newton: I shall not attempt to comment on every document. My hon. Friend will know, however, that when a debate is to take place near the date of a Council meeting, we depend to some extent on the arrival of the necessary documentation from the Commission, or from other appropriate bodies. He will also be well aware—it has been widely reported in the newspapers—that my right hon. Friends have made clear their own view on the late arrival of very important documents from the Commission for the Council itself.

Mr. John McAllion: Is the Leader of the House aware that, earlier this week, The Sun carried the story that thousands of jobs were available in California for British workers, involving the rebuilding of homes that had

been destroyed in the fire? Is he aware that, misled by the story, some British workers actually went to California, only to discover that they were not allowed to work without the necessary permits—and that, in any case, the jobs did not exist?
Will the right hon. Gentleman arrange for the Minister to make a statement to the House setting the record straight, before any more British workers suffer as a result of the lies in The Sun?

Mr. Newton: I will bring the matter to the attention of, perhaps, my right hon. Friend the Secretary of State for Employment. On the other hand, I hope that the hon. Gentleman's complaint will be heard and noted by those responsible for the original story, who might then consider it appropriate for them to correct it.

Mr. Geoffrey Clifton-Brown: In view of the procedures adopted by the Opposition to disrupt the Government's business, has my right hon. Friend had any talks with the deputy Leader of the Opposition about the Jopling proposals—or are those proposals even less likely to be implemented now?

Mr. Newton: I have had a number of exchanges of various kinds with the right hon. Lady. It has manifestly not been possible so far to make the progress that I would like. It is, perhaps, for the right hon. Lady to say whether she is prepared to engage in any further efforts; but the Opposition's current stance is that they are not talking to us at all.

Mr. Harry Barnes: Some highly disturbing information has been hidden in the Library rather than being published in Hansard. It shows that only 95 per cent. of those eligible to be included on the electoral register in England and Wales are currently registered. Moreover, that includes many people who should not be registered, as they died during the process of registration or have moved away.
When we return from the Christmas recess, should we not have a debate about the state of electoral registration in this country, so that we can discuss the development of a proper procedure to secure maximum registration? We are in danger of having not only a partial Parliament that hardly ever meets, but a partial electorate.

Mr. Newton: The hon. Gentleman will have at least one opportunity in the first week back to raise that point, because the Home Secretary is here for questions on Thursday 13 January.

Mr. Win Griffiths: I draw the attention of the Leader of the House to early-day motion 281.
[That this House notes that at Prime Minister's Questions on Tuesday 14th December the Prime Minister stated that there were over a thousand grant-maintained schools, Official Report, column 826, whereas the true number is 708; further notes that on the same day at education questions the Secretary of State for Education claimed that month after month including the last three months, the ratio for opting out was 8:2, whereas the correct ratio is 6:4 at a time when ballots have fallen by two-thirds; and calls on the Prime Minister and Secretary of State for Education to make a statement to the House correcting these serious errors of fact which might mislead honourable Members into repeating them inside and outside the House.]
I have attempted to put right in a parliamentary publication factual inaccuracies made by the Prime Minister and the Secretary of State for Education during Question Time on Tuesday. The Prime Minister mistook the estimate of grant-maintained schools as 1,000, when in reality it was 708, and the Secretary of State for Education could not tell the difference between a ratio of 8:2 and one of 6:4.
If the Leader of the House cannot bring them to the House to set the record straight, will he at least send the Prime Minister back to school so that he can get a better grasp of number, and send the Secretary of State for Education back to school so that he can learn to speak English in a much clearer fashion?

Mr. Newton: I suspect that the mathematical confusion may be in the hon. Gentleman's mind, since I understand that parents at well over 1,000 schools voted in favour of grant-maintained status, and applications from 840 of them have already been approved. Obviously, the exact proportion for and against varies from month to month, but taking the whole period since balloting began in 1988, the proportion has remained more or less constant at around eight out of 10.

Mr. Alan Simpson: I draw the attention of the Leader of the House to the United Nations convention on the rights of the child, especially article 34, which calls on all states to take effective action to protect all children from sexual exploitation. In the light of that, I ask the Leader of the House to read the article in The Mail on Sunday, which highlighted the disturbing growth of child prostitution in Nottingham.
On the assumption that this is an all too sad reflection of what is going on in major cities up and down this country, can I ask the Leader of the House to find time for a debate on child prostitution in British cities, the inadequacies of current British law in terms of penalties against men who draw children into prostitution and the over-stretched nature of resources available to work with those children?

Mr. Newton: In one sence, I probably can promise the hon. Gentleman a debate, first, in fairly general terms and, no doubt subsequently if he wishes, in more specific terms. Of course, the first business in the first week back is the Second Reading of the Criminal Justice and Public Order Bill, to which such matters would clearly be relevant.

Points of Order

Mrs. Margaret Beckett: On a point of order, Madam Speaker. I should be most grateful if you could clarify a point of order which arose during business questions. You will have heard the Lord President asked about the handling of Prime Minister's questions, and you will have heard him say that he had never heard the Leader of the Opposition answer questions, as though that were in the context of Prime Minister's questions.
Will you place it on record and beyond doubt, first, that Question Time—whether for the Prime Minister or any other Minister—is to enable Government policy to be scrutinised by the House; and, secondly, that it would be out of order, and you would take a most serious view, if Labour Members sought to give answers instead of asking questions at that time?

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): Madam Speaker, certainly with deference to you—I am not quite sure about the right hon. Lady—I made my position on that absolutely clear in response to a question asked from the Back Benches only a few moments ago.

Mr. Iain Duncan-Smith: On a point of order, Madam Speaker. I seek your guidance about Prime Minister's Questions today. While Prime Minister's Questions are normally noisy, it struck me that there was a concerted attempt by Opposition Members to drown the Prime Minister so that Tory Members could not hear him. I wonder whether you think that that is a breach of privilege.

Madam Speaker: Many hon. Members enjoy themselves during Question Time, and it is my wish that we have less noise during those exchanges.

Mr. Bruce Grocott: rose—

Madam Speaker: No, let me deal with the point of order raised by the right hon. Lady.
The way in which we conduct our parliamentary system is for the Executive to be accountable to Parliament and to answer questions, whether through parliamentary questions, statements or exchanges during debate. That is the whole basis on which our tradition has been built. The Executive are responsible to Parliament and the House for their conduct of policy.

Dr. Norman A. Godman: On a point of order, Madam Speaker.

Madam Speaker: Does it relate?

Dr. Godman: No, it is an entirely different matter, on which I seek your advice.
Yesterday, the statement concerning the joint declaration on Northern Ireland was aided by the placing of copies of the declaration in the Vote Office so that all hon. Members had access to the declaration to which the Prime Minister referred, understandably, in a very liberal way. It seems that a useful precedent was created. This is where I seek your guidance.
When Ministers make statements relating to documents, especially comprehensive ones, it would be useful if those


documents could be placed in the Vote Office at an early time to enable hon. Members to read through them, as we were able to read the declaration yesterday.

Sir Peter Emery: Further to that point of order, Madam Speaker. At present, the Procedure Committee is investigating this matter to see whether it can be dealt with as the hon. Gentleman suggests.

Madam Speaker: As hon. Members are aware, this matter is raised with me at least once a week. For the moment, it is for the discretion of Ministers as to whether documents are available. I am delighted to hear that the right hon. Gentleman the Chairman of the Procedure Committee is looking into the matter.

BILLS PRESENTED

NON-DOMESTIC RATING

Mr. Secretary Gummer, supported by Mr. Michael Portillo, Mr. Secretary Redwood, Mr. David Curry and Mr. Tony Baldry, presented a Bill to make further provision with respect to non-domestic rating for the financial year beginning in 1994 and subsequent financial years; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed. [Bill 8.]

CRIMINAL JUSTICE AND PUBLIC ORDER.

Mr. Secretary Howard, supported by the Prime Minister, Mr. Chancellor of the Exchequer, Mr. Secretary Gummer, Mr. Secretary Lang, Secretary Sir Patrick Mayhew, Mrs. Secretary Bottomley, Mr. Secretary Redwood and Mr. David Maclean, presented a Bill to make further provision with respect to the treatment, and certain services connected with the treatment, of offenders; to amend the law relating to bail; to amend the law relating to the proceedings of criminal courts, including the law relating to evidence and the law relating to juries, and the law relating to the collection of fines; to amend the law relating to the publication of reports or pictures relating to proceedings in which children or young persons are concerned; to penalise intimidatory or harmful conduct towards witnesses, jurors and others; to confer new powers on the police to take samples from or search persons and to make further provision in relation to samples and fingerprints; to create new offences and make further provision in relation to persons unlawfully or without authorisation on land or causing a public nuisance by noise on land or otherwise affecting public order, including offences in relation to the recovery of possession of land from squatters and to make related amendments and repeals in certain enactments relating to gipsy caravan sites; to create further powers and offences for the prevention of terrorist activities; to amend the law relating to obscenity and pornography and the enforcement of the Video Recordings Act 1984; to make further provision in relation to prisons, the provision of prison services and employment in the prison service; to amend the law relating to the transfer of detainees; to increase certain penalties; to extend the powers of the Serious Fraud Office; to penalise the sale of tickets for designated football matches by unauthorised persons; to authorise the payment of grants for expenditure on measures for the prevention of crime or reduction of the fear of crime or for security at party conferences; and for purposes connected with those purposes: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed. [Bill 9.]

BANK OF ENGLAND (AMENDMENT)

Mr. Nicholas Budgen, supported by Sir Terence Higgins, Mr. Richard Spearing, Mr. John Watts, Mr. Giles Radice, Mr. A. J. Beith, Sir Thomas Arnold, Mr. Barry Legg, Mr. Brian Sedgemore, Mr. Quentin Davies and Mr. Nigel Forman, presented a Bill to amend the Bank of England Act 1946 so as to remove the general power of the Treasury to give directions to the Governor of the Bank; to establish price stability as the primary objective of the Bank and to provide for policy targets for the carrying out of this objective; to enable the Treasury to override

this primary objective in certain circumstances; to make provision as to the annual report of the Bank; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 28 January, and to be printed. [Bill 10.]

ENERGY CONSERVATION

Mr. A. J. Beith, supported by Mr. Robert B. Jones, Mr. Clive Soley, Mr. Simon Hughes, Mr. Cynog Dafis, Mr. Andrew Welsh, Mr. Roy Beggs, Sir John Hannam, Mrs. Barbara Roche, Mr. Gary Waller, Mr. Malcolm Wicks and Mr. Andrew Robathan, presented a Bill to make provision for the conducting of energy audits and the drawing up of energy conservation plans and priorities for residential properties in their areas by local authorities in the United Kingdom; to give the Secretary of State powers to set timetables for such plans and for works arising from them; and for related purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 4 February, and to be printed. [Bill 11.]

TOBACCO ADVERTISING

Mr. Kevin Barron, supported by Mr. Hugh Bayley, Mrs. Edwina Currie, Mr. Donald Dewar, Sir Peter Emery, Sir John Hannam, Mr. Gerald Kaufman, Mr. Roger Sims, The Reverend Martin Smyth, Sir David Steel, Mrs. Ann Taylor and Mr. Dafydd Wigley, presented a Bill to make illegal the advertisement of tobacco and products containing tobacco other than at the point of sale; to make illegal the promotion by other means of tobacco and products containing tobacco; and for related purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 11 February, and to be printed. [Bill 12.]

CHIROPRACTORS

Mr. David Lidington, supported by Mr. Malcolm Moss, Mr. Alan Simpson, Ms Liz Lynne, Mr. David Tredinnick, Mr. Bill Cash, Mr. Geoffrey Clifton-Brown, Mr. Peter Butler, Alice Mahon, Mr. Doug Hoyle, Jean Corston and Mr. David Atkinson, presented a Bill to establish a body to be known as the General Chiropractic Council; to provide for the regulation of the chiropractic profession, including making provision as to the registration of chiropractors and as to their professional education and conduct; to make provision in connection with the development and promotion of the profession; to amend, and make provision in connection with the Osteopaths Act 1993; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 18 February, and to be printed. [Bill 13.]

ANTARCTIC

Mr. Michael Jopling, supported by Dr. John Cunningham, Mr. David Howell, Sir David Steel, Dame Elaine Kellett-Bowman and Mrs. Chris Smith, presented a Bill to make new provision, in connection with the Antarctic Treaty signed at Washington on 1 December 1959; to make provision consequential on the Protocol on Environmental Protection to that Treaty done at Madrid on 4 October 1991; to make provision consequential on the Convention on the Conservation of Antarctic Marine Living Resources drawn up at Canberra on 20 May 1980; to provide for the taking of criminal proceedings against, and the punishment of, British citizens and others in respect of certain acts and omissions occurring in that part of Antarctica that lies between 150 degrees West longitude and 90 degrees West longitude; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 25 February, and to be printed. [Bill 14.]

ROAD TRAFFIC REGULATION (SPECIAL EVENTS)

Mr. Peter Atkinson, supported by Mr. Sebastian Coe, Sir Paul Beresford, Mr. Peter Bottomley, Mr. Geoffrey Clifton-Brown, Mr. John McWilliam, Mr. A. J. Beith, Mr. Raymond S. Robertson, Mr. John Greenway and Mr. David Harris, presented a Bill to make provision, in connection with sporting or social events held on roads or entertainments so held, for the restriction or regulation of traffic on roads; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 4 March, and to be printed. [Bill 15.]

CIVIL RIGHTS (DISABLED PERSONS)

Dr. Roger Berry, supported by Mr. Alfred Morris, Sir John Hannam, Sir David Steel, Mr. Dafydd Wigley, The Reverend


Martin Smyth, Sir Richard Body, Mr. Gordon McMaster, Mr. Richard Shepherd, Mr. David Hinchliffe, Mrs. Margaret Ewing and Mr. Robert N. Wareing, presented a Bill to prohibit discrimination against disabled people on the ground of their disability; and for connected purposes: And the same was read the First time; and ordered to he read a Second time upon Friday 11 March, and to be printed. [Bill. 16.]

WATER (DOMESTIC DISCONNECTIONS)

Mr. Stanley Orme, supported by Mr. Richard Burden., Mrs. Anne Campbell, Mr. John Denham, Mr. Bill Etherington, Mr. Frank Field, Mr. Simon Hughes, Helen Jackson, Mr. Rhodri Morgan, Mr. Edward O'Hara, Mrs. Elizabeth Peacock and Mr. Paul Tyler, presented a Bill to amend the Water Industry Act 1991 so as to remove the powers of water undertakers to disconnect residential premises in cases of non-payment of charges; to constrain the installation of pre-payment devices for the supply of water; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 25 February, and to be printed. [Bill 17.]

NURSERY EDUCATION (ASSESSMENT OF NEED)

Mr. Nigel Spearing, supported by Ms Diane Abbott, Mr. Don Foster and Mr. Ray Powell, presented a Bill to require local authorities to have regard for the need for securing that provision is made for pupils who have not attained the age of five years by the provision of nursery education as in section 8(2)(b) of the Education Act 1944; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 18 February, and to be printed. [Bill 18.]

PROTECTION OF DOGS

Mr. Alan Williams, supported by Sir Teddy Taylor, Mr. Alan Meale, Mr. Terry Lewis, Mr. Andrew Borden, Mr. Simon Hughes and Sir Terence Higgins, presented a Bill to make it an offence to cause or allow a dog to enter a subterranean refuge of any wild animal; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 4 February, and to be printed. [Bill 19.]

RACE RELATIONS (REMEDIES)

Mr. Keith Vaz, supported by Ms Harriet Harman, Mr. Max Madden, Mr. Jeremy Corbyn, Ms Liz Lynne, Mr. Ieuan Wyn Jones, Mr. Sebastian Coe, Mr. Gyles Brandreth, Sir Ivan Lawrence, Ms Diane Abbott, Mr. David Trimble and Mr. Andrew Welsh, presented a Bill to remove the limit imposed by subsection (2) of section 56 of the Race Relations Act 1976 on the amount of compensation which may be awarded under that section and to make provision for interest in connection with sums so awarded; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 18 February, and to be printed. [Bill 20.]

PARLIAMENTARY COMMISSIONER

Mr. Gerald Malone, supported by Mr. Hartley Booth, Mr. Peter Butler, Mr. John Denham, Mrs. Angela Knight, Mr. Raymond S. Robertson, Mr. Rod Richards, Mr. Tim Smith, Mr. Peter Atkinson and Mr. James Wallace, presented a Bill to include among the matters subject to investigation by the Parliamentary Commissioner for Administration actions taken in the exercise of administrative functions by the administrative staff of certain tribunals: And the same was read the First time; and ordered to be read a Second time upon Friday 25 February, and to be printed. [Bill 21.]

SALE AND SUPPLY OF GOODS

Mr. David Clelland, supported by Mr. Anthony Coombs, Mr. Simon Coombs, Mr. Stephen Day, Mr. Jim Dowd, Mrs. Llin Golding, Mr. Nigel Griffiths, Mr. Charles Hendry, Mr. Martin Jones, Mr. Stephen Milligan, Mr. Richard Page and Mr. Alan W. Williams, presented a Bill to amend the law relating to the sale of goods; to make provision as to the terms to be implied in certain agreements for the transfer of property in or the hire of goods, in hire-purchase agreements and on the exchange of goods for trading stamps and as to the remedies for breach of the terms

of such agreements; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 11 February, and to be printed. [Bill 22.]

RACIAL HATRED AND VIOLENCE

Mr. Hartley Booth, supported by Mr. Michael Alison, Mr. Nirj Joseph Deva, Mr. John Gorst, Mr. James Clappison, Mr. Anthony Steen, Mr. Keith Vaz, Sir Rhodes Boyson, Mr. Michael Bates, Mr. David Sumberg, Mr. Spencer Batiste and Mr. Greville Janner, presented a Bill to amend the law relating to racial hatred; to strengthen the Public Order Act 1986 and the Malicious Communications Act 1988; to make new provisions to combat group defamation; to enable the courts to inmpose greater penalties in criminal cases involving racial hatred; and to make further provisions to amend the law relating to racial discrimination: And the same was read the First time; and ordered to be read a Second time upon Friday 11 March, and to be printed. [Bill 23.]

MERCHANT SHIPPING (SALVAGE AND POLLUTION)

Mr. David Harris, supported by Mr. Sebastian Coe, Mr. Eric Clarke, Mrs. Margaret Ewing, Mr. Barry Field, Mr. John Horam, Mr. Richard Page, Mr. David Porter, Sir Keith Speed, Mr. James Wallace and Joan Walley, presented a Bill to make further provision in relation to marine salvage and marine pollution and the discharge of functions of the Secretary of State in connection therewith; and for purposes connected with those purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 28 Januaray, and to be printed. [Bill 24.]

INSOLVENCY

Mr. John Butterfill, supported by Mr. Nicholas Brown, Mr. Ian Malcolm Bruce, Sir Ralph Howell, Mr. Greville Janner, Dr. Ian Twinn, Mr. Richard Caborn and Mr. Philip Oppenheim, presented a Bill to amend the law relating to company insolvency and winding up, and the insolvency and bankruptcy of individuals, so far as it concerns the adjustment of certain transactions; and for connected purposes; And the same was read the First time; and ordered to be read a Second time upon Friday 14 January, and to be printed. [Bill 25.]

BUILDING CONVERSION AND ENERGY CONSERVATION

Mr. John McAllion, supported by Mr. Clive Soley, Mr. Win Griffiths, Mr. Frank Cook, Mr. Gary Waller, Mr. Andrew Robathan, Sir David Knox, Mr. Cynog Dafis, Mr. Simon Hughes, Mr. A. J. Beith, Mr. Ernie Ross and Mr. William McKelvey, presented a Bill to require the insulation against heat loss of dwelling units provided by the conversion of existing dwellings; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 11 February, and to be printed. [Bill 26.]

SMALL BUSINESS

Sir Michael Grylls, supported by Mr. Nigel Evans, Mr. Richard Spring, Mr. Richard Page, Mr. John Townend, Mr. David Shaw, Mr. William Cash, Mr. Andrew Rowe and Mr. Peter Thurnham, presented a Bill to place upon the Secretary of State a duty to promote the growth of small businesses; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 25 February, and to be printed. [Bill 27.]

WOMEN INTO PARLIAMENT

Mrs. Teresa Gorman presented a Bill to amend the Representation of the People Acts with a view to increasing the number of women elected to Parliament; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 4 March, and to be printed. [Bill 28.]

SAFETY IN SCHOOLS

Mr. David Porter presented a Bill to require schools to make certain provisions in case of fire, accident and other emergency; and for related purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 18 February, and to be printed. [Bill 29.]

Orders of the Day — Social Security (Contributions) Bill

Order for Second Reading read.

Madam Speaker: I must make it clear to the House that I have not selected the amendment.

The Minister for Social Security and Disabled People (Mr. Nicholas Scott): I beg to move, That the Bill be now read a Second time.
The House will be aware that the Bill concerns the national insurance fund, which provides finance for the range of contributory benefits, the most notable of which is the retirement pension, but which also includes widows' benefits, sickness, maternity and unemployment benefits. Nearly half the total expenditure on social security is met from the national insurance fund—more than 80 per cent. is contributed by employers or employees and less than 20 per cent. is made up by Treasury grant.
The thrust of the Bill is to increase employee contributions by 1 per cent. I recall that the great Irish-born statesman, Edmund Burke, who contribued so much to political thinking in general and particularly to thinking within the Conservative party, once said:
To tax and to please … is not given to men.
If I cannot bring pleasure to the House, I hope that I will at least be able to persuade hon. Members that what we are proposing is both a rational and a prudent measure for the Government to take at this time.
The other day the hon. Member for Glasgow, Garscadden (Mr. Dewar) reminded me of my previous appearance, about a year ago, at the Dispatch Box in connection with a social security contributions Bill, when I referred to the concept of a contributory scheme being firmly embedded in the collective mind of our nation. That leads me to believe that most people will recognise that at a time when benefit expenditure is still expected to rise and contribution income is not keeping pace with cyclical pressures, an adjustment in contribution rates should be made. It is implicit in the contributory principle that contribution rates will fluctuate either up or down.
It is worth reminding the House that the contribution increase proposed in the Bill is the first since 1983. The Government reduced employees' contributions in 1985 and again in 1989. Both changes were particularly targeted at helping lower-paid workers. After the 1 per cent. increase has been set, many people will still pay less from next April than they would have done under the flat 6·5 per cent. which applied under the Labour Government.
The Government, of course, have no money of their own. They simply redistribute money collected through taxes and contributions in the way that Parliament prescribes. It is self-evident that no one would volunteer to pay extra contributions or taxes. Last year, we avoided an increase in national insurance contributions by introducing the facility for a Treasury grant to the fund to help sustain its balance.
The House will be well aware that my right hon. Friend the Secretary of State for Social Security has found it possible to announce the full uprating of all benefits for 1994–95 in line with inflation, as well as extra help with fuel costs for pensioners, widows and people receiving

invalidity benefit. For the national insurance fund alone, that help will take expenditure to about £40 billion in 1994–95, an increase of about £1 billion on this year's expenditure.
Income to the fund from national insurance contributions is not, however, keeping pace with expenditure. For instance, if contributions were kept at existing levels we would continue to spend between £4 billion and £5 billion more on benefits than our net contribution receipts. As the House will be aware, the Social Security Act 1993 introduced the facility for a grant from the Treasury to the national insurance fund. The grant will continue to be an intrinsic part of our strategy for balancing that fund, but we nevertheless consider it right that, in the medium term, contributors should be expected to bear a somewhat greater proportion of the cost of benefits rather than taxpayers generally being expected to make up all the deficit.

Dr. Norman A. Godman: I am grateful to the right hon. Gentleman for displaying his characteristic courtesy in giving way. Is it his Department's intention to publish an explanatory leaflet about the details of the increases which would be available to anyone who is affected by the Bill? If so, will he seek to explain to all employees the obligations of the Government towards them in terms of the payment of such benefits?

Mr. Scott: I will ensure that the usual information on the workings of the national insurance fund and the contributions paid by employees and employers is made available. When we return to the House after the Christmas recess, there will be an opportunity for the House, provided that we complete proceedings on the Bill today, as we must, to consider the regulations that will cover the detail of the Bill. That would be an appropriate time for us to consider the advice that we will give to employers and employees for the arrangements that will exist in the new financial year.
The detail of the Bill deals with a single substantive measure—the 1 per cent. increase in employees' national insurance contributions. I shall mention two subsidiary items later.
The proposed increase in contributions has been public for a considerable time, having been announced in the March Budget by the former Chancellor, my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont). Earlier this week, when the House discussed the Bill's timetable, my right hon. Friend the Leader of the House said that, since then, at least 15 days had been available for discussion of the proposal.
The increase in employees' national insurance contributions requires social security legislation separate from the Finance Bill, because it is not a taxation measure, but a national insurance fund income measure under the care and management of my right hon. Friend the Secretary of State. The other detailed aspects of the annual contributions rerating, which my right hon. Friend announced on the day of the Budget, will be dealt with, as I said a few moments ago, in the usual regulations and the affirmative order at a later date. I can confirm—in response to a point raised yesterday—that that order will, as is statutorily provided for, be accompanied by the customary report of the Government Actuary.

Mr. Archy Kirkwood: Can the right hon. Gentleman clarify whether there will be


an opportunity to discuss the uprating statement, as in the past? Do the new Budget procedures preclude the ability to have a proper debate in the House on the details of the uprating statement?

Mr. Scott: There was ample opportunity for hon. Members to respond when my right hon. Friend made the uprating statement. As we have moved to a unified Budget, immediately followed by an uprating statement and then by legislation giving effect, where necessary, to any of the announcements, including the uprating statement, I do not believe that there is any shortage of opportunity in the House to discuss the impact of measures.
I am aware that, during the debate on the timetable of the Bill, hon. Members wondered whether the general arrangements of the House needed to be looked at in the light of the arrangements for the unified Budget. That is not a matter for me to settle, but I know that those who are responsible for the business of the House are giving some thought to it. That is the greatest comfort that I can give the hon. Gentleman at the moment.
I should emphasise that the increase applies only to the main rate of contributions—earnings over £57 a week—and does not apply to the lower rate of contributions; so lower-paid workers will pay proportionately less at the new, higher rate and the greatest increases will be for those on higher levels of pay at or near the upper limit. The increase across the range of earnings, on which the state-earnings related pension scheme accrues, maintains the contributory principle of the scheme as a whole. The 1 per cent. increase will assist the national insurance fund to the tune of £1·9 billion in the first year.
We are aiming—subject, of course, to parliamentary progress—to achieve Royal Assent by the end of January or early February, to allow time for details in the separate re-rating order to follow on and to ensure that employers can plan on the revised rates being firm when they receive the new contribution rates, which will be mailed out in February.
I shall touch on two subsidiary measures in the Bill. Last night, there was, if I may use the vernacular term, a bit of a son and dance about the national health service provisions in the measures that we are considering. It was built up, no doubt for reasons best known to those in charge of the response to business on the Opposition Benches, with a good performance by the Labour Members who sit below the Gangway. The provision is a minor corrective measure, and I am sure that when it is explained it will be supported on both sides of the House.
We currently allocate about 10 per cent. of all contribution income to the health service under a principle dating back to the inception of the contributory scheme as we know it. However, we have uncovered a minor ambiguity in the legislation that split employees' contributions in 1989 into an initial rate of 2 per cent. and a main rate of 9 per cent. which, as the House will be aware, is to be increased to 10 per cent. I am entirely clear that it was always intended that the NHS allocation should, from 1989 onwards, be paid out of the main rate and not out of the lower 2 per cent. rate, because that would have left only about half the 2 per cent. contribution rate to go into the national insurance fund.
As drafted, the legislation certainly excludes calculating the allocation on the 2 per cent. rate and it could be interpreted as excluding an allocation to the NHS on variants of the main 9 per cent. rate—for example, where

employees are contracted out of SERPS and a rebated main contribution rate is paid. That was never the intention and the allocation has been paid all along to the NHS from all contributions from employees above the initial 2 per cent. rate. That simple addition to the Bill is a small amendment to ensure that legislation and time-honoured policy and practice properly coincide.
The third provision of the Bill is a simple clarifying amendment, which involves no change in policy. It will not change in any way the assessment for class 4 contributions and no one will be any worse off. It aims to put beyond doubt the existing policy that payments made to approved personal pension schemes by the self-employed are not allowable as relief in the computation of profits on which class 4 contributions are charged. It is in line with the basic principle that only genuine business expenses, not personal expenses, are allowed.
My right hon. Friend the Secretary of State has made it clear on a number of occasions that the Government are committed to the welfare state, but to one which will not outstrip the nation's ability to pay for it in the longer term. However, I believe that the levels of expenditure to which we are committed for the immediate future require a readjustment of the balance of expenditure met by the taxpayer and the contributor. The increase in contributions is modest in terms of our past record, which is that we have twice reduced contributions and saved most people about £3 a week. I commend the Bill to the House.

Mr. Donald Dewar: I thank the Minister for his courteous explanation of the Bill. I must confess that he reminded me that he is not a man given to raising the temperature. I suspect that that is why he has been put up to speak on this occasion. I especially appreciate the way in which he referred with slight distaste to the uncovering of a minor ambiguity—as if he were the proprietor of a bungalow and had found a worm on his lawn. I assure him that I do not intend to pursue that matter and follow the ingenuity of my colleagues that night.
I am more interested in what the Minister presented as an almost technical adjustment—in the increase in the basic national insurance contributions for employees. It is a short and simple Bill, which is to some extent brutal. Undoubtedly, it will be unpopular and will have unpleasant consequences. It is full of somewhat sinister possibilities for future policy.
I am genuinely a little surprised that the Secretary of State has decided to sit this debate out, although I understand that he is here and available to comment. However, I regard the Bill as an important measure; it is part of the central budgetary strategy of the Government and will raise a great deal of money. I do not want to make a war dance, but it is remarkable that the Secretary of State does not wish to explain the measure to the House himself and put it in the wider context—the Secretary of State is a great man for his wider context.
The Government strategy is built on taxes, which have increased over recent times, are increasing and, if the Chancellor has his way, will go on increasing dramatically. I would never criticise the Chancellor's commitment to the policy that he has chosen—to set about raising taxes with vim, vigour and a fair degree of imagination. We know from his evidence about which there has been a good deal of talk already, that the Chancellor told the Treasury Select


Committee yesterday that there was no dispute and that it was common ground that what would be raised in the coming financial year would be the equivalent of 7p on the standard rate of income tax.
That is a pretty staggering figure for Conservative Members of Parliament—especially for those who have unusually long memories and can remember what they said during the general election campaign. The fact that the Chancellor has confirmed that his proposals will add the equivalent of £9 or £10 to the bills of an average family and that in the following year that £9 or £10 will escalate to £16 is, to put it charitably, food for thought among Conservative Members of Parliament and voters.
We are considering £24 billion over three years—a massive hike in taxation and one of the greatest in modern times. In the grand design, which was hidden with remarkable tenacity during debates on the general election, the Social Security (Contributions) Bill has a key and rather dishonourable role.
The Minister was careful to make a technical distinction about the adjustment in the contribution rate and he said that it was not a matter of taxation. I understand why he wants to clutch to that fig leaf—fig leaves were mentioned in the debate last night and I am glad to adopt that metaphor. It is a rise in taxation—a substantial rise—which affects the vast majority of the working population. I quote in evidence of the fact that it is taxation a speech made on 7 October 1993—to which I am sure the Minister listened —at the Conservative party conference by the present Chancellor of the Exchequer. He said:
Most of Norman Lamont's tax increases will come from higher National Insurance Contributions, cuts in income tax allowances and a clampdown on tax avoidance".
We know that Ministers now rather belittle the idea of clamping down on tax loopholes and tax avoidance. The point I stress is that the Chancellor straightforwardly said that his predecessor's tax increases would come mainly from three areas, and the one area that led the list was higher national insurance contributions.

Mr. Nigel Evans: The hon. Gentleman is obviously an expert on increasing taxation. Perhaps during his speech he will refer to Labour's policies and proposals for taxation and national insurance. Does Labour still have the policy of adding 10p to the top rate of tax, whatever that would be, and of removing the ceiling from those on the top level of national insurance? For many workers earning modest sums, the increase in income tax would be 20 per cent.

Mr. Dewar: I am always glad when the hon. Gentleman comes seeking the truth, although I am a little puzzled by his statement. My hon. Friend the Member for Dunfermline, East (Mr. Brown), the shadow Chancellor, has outlined a specific list of proposals on many occasions, usually with a certain air of embarrassment because he is greeted with shouts of "Boring!" from hon. Members such as the hon. Member for Ribble Valley (Mr. Evans). It is not a case of the hon. Gentleman not knowing; it is a case of his not wanting to listen or to learn.
The Chancellor spoke at the conference about loopholes and about tax avoidance. A list of specific loopholes, including corporation tax loopholes, executive share options, advance corporation tax and scrip dividends, has been put on the table by my hon. Friend the shadow

Chancellor. It would greatly improve the knowledge of the hon. Member for Ribble Valley—I have no doubt that he would enjoy the task—to read some of my hon. Friend's speeches.
There is a great deal of concern about the shadow Budget and about national insurance contributions—[Interruption.] I am glad that the hon. Member for Langbaurgh (Mr. Bates) appears to be about to raise the matter. It fills two whole pages of the defensive briefing which was prepared for this debate by Conservative central office. The briefing contains a little calculation of the impact of Labour's proposals on an especially sensitive group of voters—those who earn just over £22,000. We were told that they would be especially victimised and that it was unthinkable that the shadow Chancellor could impose such a burden. We have the figure here. It is said that someone who earns £22,000 would have to pay £2·98 more a week under Labour's proposals. That is terrible, unthinkable and cause for outrage.
I do not know whether, in his deep researches into the matter, the hon. Member for Langbaurgh has taken the trouble to look at the briefing on the Bill prepared by the Library. If he takes that trouble, he will see someone earning £430 a week will pay far higher national insurance contributions than those proposed by the Labour party before the general election. I am very puzzled. I took the Conservatives' outrage and concern about the impact of those proposals as wholly genuine.
I am sure that the hon. Gentleman does not dispute the arithmetic of the House of Commons Library. The figure will not be £2·98, as suggested in the shadow Budget and as quoted by Conservative central office. People in the category I have mentioned will face an increase of £4·56 a week. As there was outrage at the proposition produced before the general election, I confidently look forward to seeing the hon. Gentleman in my Lobby tonight. He must now be experiencing the most appalling difficulties of conscience about how he can support an imposition on those people which is far larger than any previously proposed.
Although the Secretary of State for Social Security is technically in charge of the Bill, it is, of course, part of the central Budget strategy, with its proposal of the equivalent of 7p on the standard rate. It was interesting that the Chancellor told the Treasury Select Committee yesterday that although all that was true, he was not raising money by putting 7p on the standard rate of income tax because there were better ways in which to do it. He said:
I think it's been raised in a much more desirable fashion myself.
I suppose that if he did not think that, no one would think that, so we should be grateful for his remark.
In the cheerful and chattering Sun, which always has helpful information on these matters, we get further assistance. The article says:
Treasury experts"—
fancy that: The Sun has been talking to Treasury experts—
believe increased income tax discourages hard workers while VAT-style rises make people feel better off.
I confess that as I move round my constituency and talk to people who are worried about increases in VAT, about national insurance contributions and other indirect taxation rises, they express a wide variety of sometimes irritated opinion on the matter. I have not yet come across anyone who has said, "I feel better off as a result of these increases


in taxation." If The Sun has that odd animal in captivity, Treasury expert or not, it would be helpful for that person to be produced for inspection and analysis.
The Chancellor is reported in the Daily Mail as saying, when describing how he went for the better methods of raising the money:
I looked for those increases which would be most accepted and supported by the public.
We know now that the Chancellor had a pick-and-mix approach to the matter. What he picked and what he mixed were his proposals on mortgage interest relief at source, VAT on domestic fuel, holiday tax, car insurance tax and home insurance tax. He homologated—I accept that he was not the parent of this—the national insurance increase which had been put on the table by his predecessor, the right hon. Member for Kingston upon Thames (Mr. Lamont).
No one in his right mind believes that the taxes will be popular. I believe that many Conservative Members hoped that they would not be noticed. They hoped that they could be smuggled through without any great public concern. That may be one reason why the Prime Minister used to say—the best known occasion was 28 January 1992—that the Government had no plans to raise the level of national insurance contributions. I confess that when I hear the Prime Minister or any of his senior Ministers saying that he has no plans, I run for cover. That is increasingly the public's attitude to these events.
The chairman of the Conservative party at the time of the election, when ruling out an increase in national insurance contributions, said—it was a nice phrase—that it would be a "stealth tax". "Stealth" is not a word that I associate easily with the knockabout style of the Chancellor. I do not regard him as a stealthy figure; he falls into the category of the cheerful spiv in his general approach to these matters.
The stealth factor was a military metaphor. We all know that the Conservative party is much given to military metaphors. The idea was that the Conservatives would smuggle in the increase at low level and undetected. My message to the Minister is that there is nae chance. The increase will be very much resented, and even when broken promises have been very much devalued by the frequency with which they have occurred, many people will see it as offensive.
I shall explain why, apart from broken promises, we believe that the Chancellor made an unfortunate choice when he decided to lay aside any direct taxation and to go for this form of indirect taxation. The Minister will know that the increase bites further down the income scale than income tax does. There are about 500,000 people who do not pay any form of income tax, but who pay national insurance contributions. Let us consider a shop assistant earning £6,000 a year. That person will pay another 38p a week—not a lot—as a result of the increase in national insurance contributions. If there had been an increase in direct taxation, that person, probably although not necessarily a lady, would have paid nothing because she would have been above the tax threshold.
I made the point about a different situation, where the increase will hit hard those earning just above £22,000, £23,000 or £24,000. I understand from my Conservative aquaintances that they are archetypal election fodder for the Conservative party. That is a strong contender for the most shameless broken promise of this Parliament, but I accept that some of my hon. Friends may disagree, because

it is such a formidable field. The one thing on which we can all agree is that this is part of a Budget and it illustrates the principle that we are being asked to pay more and get less.
I have read Conservative material that suggested that national insurance contributions should go up. I pay tribute to the Minister, who did not try to argue that, although it has been argued by some of his colleagues, who say that it should go up because of the increase in benefits. In a sense that is true. Benefit costs have risen because we are funding unemployment and the recovery that has never come. It was a recovery that so excited the Chief Secretary at the time of the election that he failed to notice that we were heading for a £50 billion public sector borrowing requirement, as he rather disingenuously explained in a recent debate.
We must look at the balancing account—what people will get in return for the increase in national insurance contributions. It is particularly relevant, because if—it is a bit of an "if"—the Minister is right that it is not just general taxation, it would not be unreasonable to assume that there would be some sort of balancing improvement in benefit provision. The tragedy is that, over the years, many of the entitlements that arise from national insurance contributions have deteriorated.

Dr. Godman: Surely it is not just a question of deterioration in those benefits. There is a serious case, is there not? The Department is refusing to honour obligations to persons who have legitimate claims for contributory pensions. The Minister is still refusing to accede to a decision taken by a commissioner 18 months ago that women aged between 60 and 65 should be paid invalidity benefit. The Department is still refusing to honour that decision, which was taken in April 1992. Surely that is dishonourable.

Mr. Dewar: I admire—I use the word in no loose sense—the tenacity with which my hon. Friend has pursued that matter. He was temporarily out of the Chamber yesterday when the shadow of Mrs. Rose Graham fell across our proceedings. I agree that the way in which these matters get bogged down in litigation is alarming. As I understand it, there is now a suggestion that the Court of Appeal should remit the case to the European courts. We do not know when we will get a specific result.

Dr. Godman: I am sorry that I was absent yesterday when Mrs. Rose Graham was mentioned. In the case of a constituent of mine, I have made a formal complaint to the parliamentary ombudsman, accusing Ministers and their officials of maladministration in the matter.

Mr. Dewar: I know that my hon. Friend is knocking tirelessly on every door, and I endorse—

Dr. Godman: It is the Court of Session next.

Mr. Dewar: My hon. Friend and I look forward with interest to the unfolding drama.
I endorse my hon. Friend's general point. There are problems about obligations and worries about the way in which they are being eroded and disregarded.
I shall now use as an example the right to unemployment benefit, which is directly linked to national insurance contributions. It is interesting. In 1980—there will be people here with more detailed knowledge than myself—the abatement of unemployment benefit against occupational pension income was introduced. In 1989, that


abatement was applied at the age of 55 rather than at 60. In 1984, the child dependency additions were abolished. In 1992, the earnings-related supplement was abolished. During those years, benefits were taxed.
A raft of new regulations—I do not think that anyone would quarrel with me about the matter—was specifically designed to disqualify and obstruct those trying to claim the benefit. The Government have a history of removing entitlements, weakening their obligations under the contract that is implicit in the national insurance scheme and trying to ensure that people did not draw unemployment benefit as they once would have done.
In his famous Mais lecture—famous because it is now read by many of my colleagues—the Secretary of State argued that one of the reasons for success in job creation in the United States—I hope that I do not misinterpret or misrepresent him—was that people had far less generous unemployment cover there. Presumably one might say that that physically and metaphorically cracked the whip behind the unemployed and persuaded them back to work. The implication clearly spelt out by the Secretary of State was that, if we could further weaken unemployment cover, we might get the same reaction.
It should not come as a surprise that, when we look at that long list of weakening of the unemployment benefit system, we now see a further move in that direction with the jobseeker's allowance. I find it illogical, ironical and slightly offensive, in view of the Government's record, that one of the reasons given for the job seeker's allowance is that so many unemployed people—I think that 70 per cent. was mentioned—are not getting unemployment benefit that it might as well be virtually abolished.
Of course a large number of people are not getting unemployment benefit when they are not working. In large part, that is because of the rule changes for which the Ministers who advance that argument have been responsible. It is a piece of sophistry to conduct the argument on that basis.
Whoever winds up the debate may wish to deal with this—perhaps the Under-Secretary of State, the hon. Member for Richmond, Yorks (Mr. Hague), who seems to be the winder-up-in-chief. The job seeker's allowance is a cutting of an automatic entitlement in one's own right, on the basis of the contributions paid, to support when unemployed for between six and 12 months. My understanding from a written answer that came through the House a few weeks ago, is that if that was applied to unemployment benefit now, 240,000 people would no longer be entitled. That seems to be a real example of the "pay more, get less" theme, which is a mark of the Administration, the Bill and the Budget.
When the Minister winds up, I would like him to say a word or two about that. We know that the Chancellor said that the whole point of the job seeker's allowance was to align rates and rules between income support and the job seeker's allowance when it came to replace unemployment benefit. Another point that was made, and I understand it, was that one is a contributory benefit and the other is non-contributory.
Therefore, the contributory benefit would be uprated on the retail prices index, and the other on the Rossi index. If we are to have harmonisation on that point, it would be useful to know at this stage, as we prepare for the debates

later, whether the new job seeker's allowance will be uprated on Rossi or on the RPI. It is a little like the problem that Members have when their constituency is halved by the Boundary Commissioners. Which way will they go? When it comes to the uprating, which way will the Secretary of State go?
I shall ask the Minister two specific questions. There will be wide interest in the response. I have heard—the Minister will be listening to me on this—rumours that, under the cover of introducing the job seeker's allowance, additional payments for adult dependants will be abolished. As the Minister knows, that is a feature of the contributory rights built up at the moment and honoured in the unemployment benefit scheme. Can he offer reassurance—or, if it is wrong, can he deny it—that the additional payments for adult dependants, at £27·55 a week at present, are not going to disappear and be quietly dropped overboard, thus representing a significant cut in benefit under the repackaging that the job seeker's allowance represents?
I am anxious, because I missed it—I make no apology for that—about something that the Secretary of State said in his uprating statement. He spoke of a personal rate in the first six months of the job seeker's allowance—the period of benefit as of right. I am beginning to suspect that the word "personal" was carefully chosen and that may give support to those who fear that the additional payment for adult dependants will go.
Secondly, when we align the rates and the structures, what will happen to those aged between 18 and 24? They are dealt with in a different way under income support than they are under unemployment benefit. Under the latter, there is a flat rate throughout the age range. There is no difference between the young person who is unemployed and the older one. However, under income support there is a smaller payment for those under 25. In April 1994, someone who is 24 and on unemployment benefit will get £44·45 a week, but someone who is 24 and on income support will get £36·15—a substantial difference of £9·30.
I fear that talk about aligning the rates means that people who have built up a right and an entitlement to the new job seeker's allowance will get a lower rate because they are under 25, as they would have done under income support, and will therefore be discriminated against and victimised. That is a specific question which the Minister should be able to answer easily. I shall press him to answer it when he replies.
I fear that there will be another substantial reduction in entitlement at the same time as the Government are raising contributions. It will again be pay more and get less, again robbing Peter, or almost anybody else, to pay Kenneth. The House should not nod through a Bill that does that, while assuming that there are no concerns.
I know that it is always irritating—I have always found it irritating when it happens to me—to have something one has said quoted at one. The Minister will remember that, in the social security debate earlier in the year, he said:
I do not think that my right hon. Friend has been sufficiently congratulated on the successful outcome that he has achieved—a very full uprating of benefit across the board, and no increase in national insurance contributions. I consider that a remarkable achievement."—[0fficial Report, 10 February 1993; Vol. 218, c. 1082.]
He cannot say that now. I hope—perhaps I give him credit to which he is not due—that he will continue to fight the


good fight against the Secretary of State and the Treasury, trying to preserve a decent level of return for entitlement built up through the payment of contributions.
I must draw to a conclusion, but many points need still to be explored.

Mrs. Alice Mahon: Before my hon. Friend moves on, will he confirm that the 200,000 people whom he said would lose as a result of the change in unemployment benfit and the reduction in entitlement as a result of the six months' change, will also disappear into a black hole in the unemployment statistics?

Mr. Dewar: My hon. Friend is right. I shall probably have little difficulty in persuading her that that is not an accident. It is not just a chance. I am sure that that factor occurred to Ministers as a useful by-product of the whole exercise.

Mr. Michael Bates: The hon. Gentleman has asked some specific questions. I have one for him to answer. If there were to be a future Labour Government, would they restore unemployment benefit to a universal nature and over 12 months?

Mr. Dewar: We shall have to wait and see what is proposed. [HON. MEMBERS: "Ah!"] We shall also have to see what our inheritance is. One of the features of the Government is that, every time someone invites us to put right a particular outrage, we discover that there are another six growing alongside it, and it becomes difficult to give pledges.
Let me make it clear to the hon. Gentleman that, unlike Ministers, we are concerned about preserving the proper balance between those who are in difficulty, through unemployment, sickness or disability, and those who are not. We are concerned about the way in which the balance is being tilted, with entitlements being weakened. That will be the basis from which we shall approach the problems.
I know that the hon. Gentleman takes an interest in those matters and I am sure that we shall have his support when the time comes. I do not know enough about his majority to know whether he will be here on the Opposition Benches to support us in Parliament, but I feel confident that, even in the community, he will be explaining the difficulties that we shall have to face and justifying our actions.

Mr. Oliver Heald: Will the hon. Gentleman give way?

Mr. Dewar: The hon. Gentleman came into my life for the first time yesterday. He was hyperactive. We had several speeches and a petition from him. I had a letter about him from the Secretary of State at lunchtime. I do not want to encourage him overmuch, but I gather—he tells me so—that he is the bearer of good news about the social fund. I hope that that will prove to be not a minor cosmetic change, but something substantial, dealing with the problems of the social fund.
When I spoke in the Budget debate, I drew attention to what seemed like difficult times in the Treasury. There is always a changing scene and at one point it seemed as though the Chancellor had cracked the whip and exercised his authority. I do not intend to go through it in great detail, but he gave an on-the-record briefing, much reported in the press, in which he made it clear that the back-to-basics move was nonsense, because any attempt to use the social

security system to engineer social change, or to restrict or shape it, was not a practical proposition. He went on to make some trenchant comments about those misguided enough to suggest that the middle-income group should be invited to contract out of the basic state pension.
The Secretary of State took his cue—I congratulate him on that—and spoke about it in a "Walden" interview which I particularly enjoyed. I am afraid that I missed it visually, but I read the transcript afterwards. The Secretary of State made it clear that only over his dead body would anybody be contracted out of the basic state pension. As I said the other day, he is now the "never, not ever, man". We should be grateful for that.
I do not want to rehearse all that and perhaps intrude upon private grief, but I am interested—they are relevant to the debate—in certain events since then. Although the Secretary of State for Social Security has fallen into line with the Chancellor, rather interestingly it turns out that the Chief Secretary is made of sterner stuff and has not caved in. In a key part of his briefing, the Chancellor said:
I do not see that"—
the basic state pension—
as being opted out or left as a vestigal remnant for those who cannot provide for themselves.
Only a few days later, as hon. Members will know, the Chief Secretary appeared on "Westminster Live" and said:
My worry about the state pension"—
I thought the word "worry" a little surprising, but perhaps I should welcome small mercies—
is that it is going to be worth a nugatory amount in the coming century.
I am not suggesting that pensioners all over the country, as they gather around the yuletide log and over Christmas dinner, are anxiously discussing whether a pension can be "nugatory" without being "vestigial", but that is a matter of considerable importance. My fear is that the resistance that may still exist in the Department of Social Security, and that is clearly alive and all too well in the Treasury, may win the day.
What may happen is that the Chancellor will merely deny what is happening, but national insurance contributions will increase in the way that we are invited to authorise in the Bill. As I have illustrated fairly on unemployment benefit, there will also be a substantial rundown continuum in the worth of the basic state pension as against average earnings, so that it becomes, in that pretentious but significant word, "nugatory" by the time that we reach the next century.
When I was young, the next century seemed aeons of time away. It is now less than a decade away. Perhaps I shall even live to see it and to have that nugatory pension. Therefore, I take a personal interest in the matter. I shall watch for increasing public signs of how the debate progresses. Its significance is that it is again a clear sign of a danger of the wrong balance—tilting against entitlements, which many people imagined that they were building up as they made their contributions. It is further evidence of pay more, get less.

Mr. Heald: Will the hon. Gentleman give way?

Mr. Dewar: As I am coming to what I think the Secretary of State rather hopefully calls his "peroration" in his printed speeches, I shall allow the hon. Gentleman to intervene.

Mr. Heald: How would the hon. Gentleman make up the deficit in the national insurance fund?

Mr. Dewar: That is a good and interesting question. The hon. Gentleman will remember that, some time in the late 1980s, it was not the present Secretary of State for Social Security but some other optimist who announced that the national insurance fund was balanced and removed the statutory opportunity of making up a deficit. In 1992, the Government found themselves 20 per cent. short of the sum that they needed to meet their current obligations and had to come to the House.
We were helpful. We did not make much of it. We passed a Bill in one day because we were anxious to repair the damage and get them out of that particular embarrassment—not their embarrassment, which did not matter to me, but the embarrassment of not being able to pay people's benefits. As a result, there will be a shortage of up to 20 per cent.—it is likely to settle at about 17 per cent. Perhaps the Minister could say a word about how the figure may be influenced. Now, there is room for a Treasury subvention. That will have to happen, and I am. sure that the hon. Gentleman would expect it.
It might be helpful if we had a Government with ambitions to see a growth rate rather above the 1·6 to 1·7 per cent. annual rate of the past decade, which has left us struggling behind many other European countries. As the Social Security Advisory Committee said in a report published yesterday, which I am sure the hon. Gentleman will have taken the trouble to read, much of the Government's talk about the inability to fund the present level of social security is unjustified and can be maintained only if one takes an extremely gloomy view of our economic prospects. That is a useful corrective and is perhaps also part of the answer to the hon. Gentleman's question.

Mr. Paul Flynn: My hon. Friend may recall that the Treasury supplement was 18 per cent. in 1979 and continued at that level for many years. In the late 1980s, the Government decided that they would not pay it, because the national insurance fund was so high. Does my hon. Friend agree that the situation today is the reverse of the days when David Lloyd George said that the national insurance scheme would involve paying in fourpence to get out ninepence? Now, we pay in ninepence and get out fourpence.

Mr. Dewar: That neatly puts the argument. [Interruption.] Let me make a sympathetic suggestion to the Minister. To be fair, the problems of the national insurance fund are partly due to economic failure, which has reduced income from national insurance contributions.
I have taken up sufficient time. The Minister of State is an extremely well-intentioned man. He has never been accused of reaching for the glittering prizes. Whether he did or not, I know not, but he certainly did not grasp them. He has had an honourable career in Northern Ireland and at the Department of Social Security. It is rather sad to find him now reduced to the role of a tax collector and general demolisher of entitlements that flow from contributory benefits.
I recognise the Government's difficulty—I would be silly if I did not. If one needs to borrow £1 billion a week merely to balance the books, clearly that cannot be entirely shrugged off. I suspect that if the Chancellor of the Exchequer were in private industry, he would go bust in a big way—with style. That is my worry. I only hope that he does not take quite the same risks in future years.
The PSBR suggests that we have had some profligacy and certainly some incompetence. The one certainty is that people will have to pay dearly: £10 in the coming year or £9—I will not split hairs over that—and £16 the following year. That is an extraordinary contrast to the promises, pledges and, indeed, boasts of early 1992 when right hon. and hon. Gentlemen were on the hustings. Theirs has been a crashing fall. The trouble with politics is that once the election is over, one can lose all dignity and all claim to respect, yet survive. That is one of the ironies of British politics. The worse the Government and the more bedraggled their record, the less likely they are to be forced to go to the country. As unemployment stares Back Benchers in the face, they tend to rally to the colours.
I must content myself by saying that the measure is misconceived. It represents part of a trend to undermine the understanding, and some would say the contract, between Government and the governed which guarantees help in times of need—adequate help, as of right. The Government are embarked on a destructive course and there will be great anxiety and anger in the years ahead.
The Bill is dishonourable, not because it raises revenue—all Governments have to raise revenue and it would be silly to argue against that—but because it is part of a dishonourable package. The Government are asking people to pay more at a time when they are stripping down and undermining what people get in return. We will have none of it—and we will vote accordingly tonight.

Mr. Michael Fabricant: The hon. Member for Glasgow, Garscadden (Mr. Dewar) has had a lot of fun with Conservative party documents stolen from the Conservative research department. He has had fun, too, talking about the Government's taxation record.
The hon. Gentleman was selective in his quotes from the document. For example, he did not mention that, according to page 10, in the past three months alone the Labour party has suggested a tourism tax, a pollution tax, a payroll tax, a health tax, a road pricing tax and, heaven forbid—I cannot believe this, having heard the hon. Gentleman's talk—even an entertainment tax, as well as an education tax and a windfall tax. Yet he dares to suggest that we are the party of taxation.

Mr. Dewar: rose—

Mr. Fabricant: I am delighted to give way to the hon. Gentleman.

Mr. Dewar: I must confess that I read that page with great interest and some amusement. To say that those allegations are on thin ground and have poor foundations would be an understatement. Even if the hon. Gentleman takes them at face value, does he find them entirely ludicrous when he is about to go into the Lobby in favour of a car insurance tax, a home insurance tax, a travel tax, VAT on domestic fuel and an increase in national insurance contributions? Over the next three years we are to see the biggest tax increase that we have ever seen in the history of this country.

Mr. Fabricant: rose—

Madam Deputy Speaker (Dame Janet Fookes): Order. Before the hon. Gentleman continues, I remind the


House that we are considering a narrow Bill on Second Reading and that these exchanges could properly have taken place during the Budget proceedings.

Mr. Fabricant: Thank you, Madam Deputy Speaker, for your advice. Obviously, I would have given a devastating reply.
To return to the narrow subject of social security contributions, hon. Members will be aware that the main provision of the Bill is contained in clause 1. Its effect is to increase the rate by 1 per cent., from 9 per cent. to 10 per cent., for national insurance contributions paid by employees on earnings between the lower and the upper earnings limits. The Bill also clarifies existing national insurance contribution policy in two important areas. The first concerns how part of the national insurance fund is allocated to health service funds and the second reaffirms that self-employed people have to pay class 4 national insurance contributions on payments to personal pensions, an important element which has not been taken up so far.
There are two other important measures that do not require primary legislation: first, an increase in contributions for self-employed people on their class 4 contributions and, secondly, reductions in contributions payed by employers. The overall effect of the legislation is to simplify the administration of the fund and to make significant changes to the way in which it operates.
The most contentious aspect of the Bill is the increase in national insurance contributions, and I shall deal with that first as it has clearly not been addressed by Opposition Members. The Government, like those in all other western countries, where the old live longer and all are provided with state health care, face a huge and ever-increasing bill for social security expenditure. It now tops £70 billion. The trends behind that increase have continued unabated for decades and I think that that is accepted by hon. Members on both sides of the House. There has been an enormous increase in the costs of health care. The growth in the number of single parents and the increase in the number of working women, who rightly expect a pension on retirement, have also contributed to the huge and ever-increasing bill.
We are concerned today with trends in expenditure on contributory benefits alone, and here the story is much the same. Expenditure on those benefits rose by almost £10 billion in the four years to 1992–93 and it is expected to rise further still. Even as the world faces a wintry economic climate, and Germany and Japan continue their nose dive into recession, the Government—

Mr. Flynn: Will the hon. Gentleman give way?

Mr. Fabricant: I am delighted to give way to my honourable sparring partner.

Mr. Flynn: The hon. Gentleman, who is clearly, from his authoritative words tonight, an expert on social security, talked about the increased expenditure on national insurance. Will he give us the percentage figure by which employees' national insurance contributions have increased since 1979?

Mr. Fabricant: Anyone know? [Interruption.] My right hon. Friend the Secretary of State says 53 per cent.
As Germany and Japan have continued their nose-dive into recession, the Government have not flinched from their commitment to the needy and most vulnerable members of society. Retirement pensions alone rose by

£2·5 billion during the past four years, and now social security benefits have been uprated across the board. Our social security budget will rise by some £11 billion during the next couple of years, which I know will interest the hon. Member for Newport, West (Mr. Flynn). This is a Government who recognise their responsibilities and, unlike the Opposition—whose talk is cheap—we will deliver.
Moreover, in 1985 and 1989, Government reform of national insurance saved the vast majority of employees about £3 a week. At the previous election, Labour proposed that the upper earnings limit on national insurance contributions should be abolished. What a disincentive to work. What a disincentive to the most able in our society. That measure would have increased by 9 per cent. the tax paid by everyone earning more than about £20,000. Before Opposition Members laugh, may I say that £20,000 is not that much more than the average working wage now.
With more people than ever before claiming pensions, invalidity benefit and unemployment benefit, the national insurance fund has moved from surplus to deficit. Expenditure is outstripping income. The principle behind the scheme is that of pay-as-you-go, with this year's expenditure being funded by this year's taxes. The insurance contribution of today is not for the pension of tomorrow.
The Treasury grant that was introduced this year was a sensible measure in these difficult economic times when stimulating the economy has been of overriding importance, but it can be only an interim measure. The Treasury grant is payed for by the general body of taxpayers. Some of those, such as pensioners, have already made a full contribution towards the national insurance fund. With expenditure rising and the national insurance fund running into deficit, the fund must be topped up by increased contributions.
At this juncture, I want to give a warm welcome to a Government omission. The Government have resisted any temptation to increase national insurance contributions by employers. That makes sound sense. Alone among those in Europe, our economy is recovering, but the recovery is fragile and any measures that would hit employers could jeopardise the rebirth of our nation's wealth.

Mr. Dewar: What about statutory sick pay?

Mr. Fabricant: I shall come to the subject of statutory sick pay shortly.
Our employers could ill afford the extra costs that raised national insurance contributions would represent. Our wealth creators have been, and must be, protected to such an extent that a reduction in employers' contributions has recently been announced. The standard rate of contribution is to fall from 10·4 to 10·2 per cent. Equally significant is the reduced rate for employers of lower-paid workers—a reduction of 1 per cent.
I acknowledge that, as the hon. Member for Garscadden said, employers will have to bear the extra costs of funding statutory sick pay, but those costs have been more than offset by the cut in employers' national insurance contributions.
It is my experience that businesses that provide a pleasant working environment suffer less from employee absenteeism, whether the sickness if genuine or feigned. Putting the responsibility for sick pay back on to the


shoulders of employers will give them a major incentive to motivate the loyalty of their work forces. Opposition Members should welcome a move that would improve workers' health and well-being. Moreover, putting the burden of sick pay on employers will significantly save time on the Department of Social Security paper-shuffling that company wages clerks have to endure. That too will be an economic saving to employers.
The Government's approach to the national insurance fund and their way of dealing with the deficit is practical, imaginative and realistic. The Government are clearly aware of the need to create a strong and lively economy in order to finance welfare provision. In reducing employers' contributions recently, and employees' contributions a few years ago, they have realised the importance of keeping taxes as low as possible and are doing everything within their power to protect the motivation and enterprise of the work force.
One of the most attractive features in the approach to tackling the national insurance deficit is the care with which our lowest-paid have been treated. Even after the increase in contributions set out in the Bill, employees who earn less than £130 a week will still pay less national insurance than they did under the Labour Government in 1979. That is an impressive statistic.
The lowest-paid employees will be affected least of all by the rise in contributions. Those under the lower earnings limit will continue to make no contribution to the national insurance fund and, above that limit, those who are paid less will make a smaller contribution to funding the increase, as the hon. Member for Garscadden knows, having read the Conservative research department brief.
An employee earning £60 a week will pay just 3p a week extra, while someone earning £200 a week will have to pay £1·43 a week extra. There is a maximum of £4·56 a week. Labour would have abolished that ceiling.
The lower-paid have always contributed less to the national insurance scheme. That is right and proper. It is admirable that the Government have accentuated that feature of the system. The changes to the national insurance scheme introduced in 1985 and 1989 provided that result. The reduced rate of contributions, which was enacted in 1985, means that the lower the pay, the greater the proportion of earnings that is assessed at the lower rate.
The Government's emphasis on the needy has been demonstrated by the extra help with fuel costs being made available to pensioners. I expected Opposition Members to intervene at this point but, as none is doing so, I shall point out that although the Opposition talk about small sums being given, £120 billion is being made available to just 15 million needy and pensioners. Clearly, that figure has got through to Opposition Members—

Madam Deputy Speaker: Order. There is about to be an intervention from the Chair. How do the hon. Gentleman's comments relate to the Second Reading of the Bill under consideration?

Mr. Fabricant: I bring to the attention of the House the Government's general policy on social security and care of the needy, but I shall endeavour to confine my remarks to the more narrow subject.

Mr. Heald: Does my hon. Friend agree that one possible relevant point is that pensions are paid from the

national insurance fund and they are being uprated to help pensioners and the needy? Does he recall the hon. Member for Glasgow, Garscadden (Mr. Dewar) saying, before the Budget, that 50p compensation per pensioner would be more than adequate? The hon. Gentleman changed his tune after the Budget. Perhaps he would like to intervene on that subject.

Mr. Fabricant: I await a further intervention, but I see that there is none forthcoming.
The Government have given much encouragement to people taking out pension schemes funded by this contribution. Behind that lies the Government's aim to construct a welfare system that gives incentive to personal responsibility. It has been eminently successful, with some 15 million people—three quarters of those eligible—opting out of the state earnings-related pension scheme. Some 5 million people have private pensions, including 1·4 million self-employed people. I am pleased to note that the present arrangements, confirmed in the Bill, are working so well. They are appreciated by the self-employed, and I am glad that no attempt has been made to change them.

Mr. Bates: Before my hon. Friend leaves the subject of the state earnings-related pension scheme, and national insurance generally, may I ask whether he accepts that one of the principal advantages of private pensions is that the money put into them can be invested, thereby helping the economy to continue to grow?

Mr. Fabricant: I absolutely agree with my hon. Friend. As he says, money from pension funds has been used in ventures that have created employment for people who might otherwise be unemployed and have to draw from the very fund for which the Bill provides.

Mr. Flynn: Did the hon. Gentleman say that 15 million people have opted out of SERPS and into private personal pension schemes? I do not rise to query the figure, but I believe that it is massively inaccurate. Now that it is becoming apparent that at least 500,000 people who opted out of occupational pension schemes face poverty and old age and 1·5 million people who have opted out of SERPS also face disaster, there will be an enormous scandal because of the inherent waste of personal pension schemes. The money invested is gobbled up by huge commissions, administrative charges and profits for the company concerned. The national insurance scheme is efficient and cost-effective.

Mr. Fabricant: I am grateful to the hon. Gentleman for his speech, which enabled me to have a breather. I confirm that 15 million people have opted out of SERPS and into various schemes. If he would like to check the figures, he can read them in the Conservative party brief which the hon. Member for Garscadden clutches and will no doubt use in his wind-up speech.
The measures in the Bill will naturally be viewed in the wider context of the recently announced changes to national insurance benefits, such as the replacement of unemployment benefit with the new job seeker's allowance and the replacement of invalidity and sickness benefits with incapacity benefit.
In "Social Insurance and Allied Services", Beveridge, the founding father of the welfare state, who acknowledged that state provision should be limited, wrote:


The State in organising security should not stifle incentive, opportunity, responsibility; in establishing a national minimum for himself and his family.
Provision for the sick and elderly is absolutely necessary and a national minimum is, and always will be, provided.
Even the hon. Member for Sheffield, Brightside (Mr. Blunkett) said, in The Guardian on 18 January 1993:
It is the Labour Party that is seen as in favour of molly-coddling people. We have to be tough with ourselves and ask why that has happened. We have to convince people that we are not a tax and spend party.
Clearly, the Labour party continues to fail to get that message across.
Unconditional and long-enduring benefits for the unemployed are superficially attractive—

Madam Deputy Speaker: Order. I have already warned the hon. Gentleman to relate his remarks to the Bill under consideration. The more general remarks that he is now making could have been made in previous debates in the House in the past fortnight or so.

Mr. Fabricant: The Government's policy has been very different from that of the Opposition and has yielded spectacular results. Britain is the only nation in Europe that is not sliding deeper into recession. The Labour party is wringing its hands with pity for the needy but, whenever it has been in power, it has been unable to deliver the goods.
The provisions that we are considering reflect the Government's emphasis on sound finance and an unwavering commitment to those in need. For that reason, I commend the Bill to the House.

Mr. Malcolm Wicks: I wish to raise some fundamental questions about the future of national insurance, and shall not therefore follow the speech by the hon. Member for Mid-Staffordshire (Mr. Fabricant), although I am bound to say that I could just about tell where Beveridge ended and the hon. Gentleman carried on.
Despite the giggling on the Conservative Benches, we are dealing with some serious questions. I make a plea that, at some stage in the debate, the Minister should present us with a statement about the Government's view on the future of national insurance. Clearly, many different factors affect national insurance now, on both the contributions side and the benefits side. What is lacking from the Government is an overall statement about how they see the future of national insurance—if they see a future for it at all. It is difficult to understand that because we face, on the one hand, higher contributions—hence today's debate—and, on the other, lower benefits in real terms for many people who draw from the fund.

Mr. Bates: The point has been made several times that the amount spent on social security this year is about £74·5 billion. Over the next three years, it is due to rise to about £92 billion. That is not less out for more in.

Mr. Wicks: Obviously, we are spending more for a range of reasons, some good and some bad. Many people are living longer and are rightly drawing their pensions, although in real terms those pensions are far lower than they would have been if they had not been de-indexed from earnings in 1980. The hon. Member for Mid-Staffordshire,

who described trends affecting social security expenditure over many decades, was having us on, historically speaking.
Unemployment has been the feature of the past decade and a half, coinciding with a particular political epoch. Since the war, wise Governments—both Conservative and Labour—have pursued policies of mass employment. There was lower social security expenditure because of that macro-economic policy. I do not concede, therefore, that high public spending on social security is necessarily an indicator of sound social policy. In part, it is a sign of bad economic policy.

Mr. Fabricant: rose—

Mr. Wicks: Does the hon. Gentleman have more to say?

Mr. Fabricant: I am grateful to the hon. Gentleman. He blames unemployment, yet Germany, Greece, Ireland, Italy, the Netherlands and Spain—once again, we are grateful to the Conservative party briefing for this information—are all having to introduce measures similar to the one that we are debating.

Mr. Wicks: I do not think that leadership in Britain means following bad practice abroad. As we did in the war and thereafter, we should renew our national determination to move back to full employment. As the hon. Gentleman will see, he is not the only one who can support Beveridge. I, too, have read the Beveridge report and I intend to quote from it.
I renew my plea to the Government to make a strong statement on their vision for the future of national insurance. If we agree today—we may not—to increase contributions by 1 per cent., we should know the context of that decision and the strategy behind it. I want to spend some time outlining the changes that have affected Britain in the post-war period—how the risks have changed and how new risks have materialised as a result of social and demographic change. We need to ask how those risks will be dealt with in future.
In a sense, the modern history of social insurance starts with William Beveridge. It has, of course, a much longer history in the voluntary and state sectors here and in other European countries such as Germany. But we start, conveniently, with Beveridge who, in many respects could be regarded as a dreamer of dreams, a reverist, a man who had a vision for the future.
Equally, in many important respects Beveridge was a superb technician. He was a planner. Many of his wartime speeches are well known and oft recited, even today, because they had more to say about the 1990s, perhaps, than about the 1940s—not least on unemployment. The man's planning and technical abilities were impressive.
One of the strengths of the Beveridge report lay not in the technical detail or the broad policy but in how Beveridge and his colleagues came up in the midst of a war with a view of society, demography and employment, and of the roles of men and women. Some of his assumptions, not least about the role of women, turned out to be wrong—a good thing, we might say. Still, he had a vision, and Parliament and the Government also need a vision when they set national insurance in the context of social and economic change.
What has changed since Beveridge? First and foremost, unemployment has changed. Beveridge assumed, in line


with the Keynesian thinking of the time, that we could move towards full employment. He did not underestimate the difficulties, but that was his vision. In the simple, powerful language that he used in many wartime speeches, he spoke of the five giant evils that Britain needed to destroy if we were to construct a decent society for ourselves. He spoke of the evils of want, disease, ignorance, squalor and idleness. Many modern politicians would do well to copy Beveridge's language and adapt it. Too often these days, our debates get bogged down in detail and jargon. The landmarks are never clear.
William Beveridge had something important to say about the giant evil of idleness, by which he meant unemployment:
Idleness is the largest and the fiercest of the five giant evils and the most important to attack.
That is our text for the future of national insurance and for the 1990s. We are learning in many areas, not least those of crime and education, that unless our vision demands a move back to full employment we will always face difficulties with social security expenditure and with meeting needs that must be met through the social security system. If we lack that vision, we shall have to spend billions of pounds keeping people out of work. Macro-economic policy should make it its main business to put people back into work.
What is the Government's vision, or assumption, about full employment and unemployment? I am genuinely pleased that unemployment is falling. I see too many victims of it in my surgeries. Each time we hear of someone getting a job it is a victory for that person and that person's family, and for our community and economy—

Mr. Fabricant: On a point of order, Mr. Deputy Speaker. I was reprimanded three times by Madam Deputy Speaker for not confining myself narrowly to the subject of the Bill. Has not the hon. Gentleman allowed himself to stray?

Mr. Deputy Speaker (Mr. Michael Morris): I can assure the hon. Gentleman that, if the hon. Member had deviated by even a quarter of an inch, I would have reprimanded him. I find his speech extremely interesting so far.

Mr. Wicks: And I write my own speeches, Mr. Deputy Speaker.

Mr. Fabricant: So do I.

Mr. Wicks: Do not admit too much, my friend.
If we cannot grasp the relationship between national insurance and methods of ensuring ourselves against modern risks and against unemployment, we in this House will have a problem. I ask the Government in all sincerity why, if we can set targets and bands for inflation, we cannot set them for full employment, too. The Red Book seems to assume that there will be 2·75 million unemployed for the foreseeable future. Is that a technical assumption? Is it the Government's judgment? If it is the former, what does it mean? Will the Government tell us today what they think unemployment will be like in two years' time, or by the year 2000? My worry is that, welcome as the fall in unemployment is, it may not be enough. Do the Government believe that unemployment will fall to 2 million? What are their assumptions?

A Government's assumptions about these matters were vital to Beveridge's social insurance plan, just as they are vital to social insurance today.

Mr. Simon Burns: Does the hon. Gentleman agree that it is extraordinarily difficult to make realistic calculations of unemployment? Many economists believed that unemployment probably would not start to fall until next spring, yet since February this year, each month, including this month, unemployment has consistently fallen. That highlights how difficult it would be to make a meaningful or realistic calculation of that sensitive economic indicator.

Mr. Wicks: The hon. Gentleman is right, of course, but it seems to me that we have a Parliament and a Government because things are difficult. The more fundamental point is whether the attack on idleness and the achievement of full employment is a real objective—not a wish, because we all wish it—of economic policy. Wise people in the past from all parties—Keynes, Beveridge, Attlee and Macmillan—felt that full employment was vital. Do the Government feel that it is vital? What policy tools do they have to achieve that in the coming months and years?
The second change which has affected the landscape of national insurance, and which is therefore crucial to consideration of the Bill, is in employment patterns. We have seen the rise of the two-worker family and a massive increase in female employment, which is so important to social security. Indeed, the increase in female employment is one of the most important social security factors in this country. Mothers are able to work, although not enough can find work. There would have been far more family poverty if it were not for the employment of mothers. That is more important than child benefit and family credit combined.
I will highlight another change which affects any national insurance scheme. Although we live longer nowadays, we are employed for a smaller proportion of our lives, because we enter the labour market later. Many working-class boys and girls will not get jobs when they are 16, some perhaps never, although I hope that most will. They may get jobs when they are 17, 18 or 19. Who knows when the children of middle-class, professional people—I have two children at university now—will get jobs? They may be in their early or mid-20s. That must have implications for the contributions and benefits that we are discussing today.
I should like to relate another interesting feature of the Government's proposal that women should be able to get pensions at the age of 65. We are leaving the labour market earlier. One of the great myths about society, social security and pensions is that men work until they are 65. Many do not, and the data show that the changes have been dramatic.
In 1951, in the first census after the war, 88 per cent. of men aged between 60 and 65—the pre-retirement group—were economically engaged or active. The Beveridge assumption that men worked from when they were boys until they retired at 65 was then more or less true. The 1991 figures for that age group showed that just 57 per cent. were economically active, to use the economists' unhelpful jargon. I say unhelpful because the "economically active", according to economists, include some of the unemployed. In practice, just 49 per cent. of men in that age group were employed in 1991, and the percentage may be less now.
Should we now build contributions and benefits for men and women based on their eventual entitlement at 65, when the trends are going the other way? Why have the Government hit on 65 suddenly when so many have retired for good reasons or ill, be it voluntary retirement or redundancy, long before that age? That is an important question which I should like put to the Government.
The third change affects the caring role of the family. Any national insurance scheme which relates to social security must have a grasp and a concept of the caring role of the family, which is its most important function. Today, families have fewer children. The average is about 2, or 1·8 per woman. However, children are dependent on their parents for longer than in the immediate post-war period. As has been said, gone are the days when most young people would leave school at 16 to get things called "jobs". Most do not do so now, for good, bad and ugly reasons.
How does the social security system deal with that? How does it deal with the emerging role of the family in caring for its elders and betters? The figures show that 6·3 million people are family carers who look after elderly parents or another relative. Given that many of those carers are women, some of whom, although not all, must leave employment, what are the implications for social security?
I know that the Government have some answers—for example, that national insurance contributions have been allowed for. However, any future strategy for national insurance must pay more attention to the role of people, many of whom are in their 50s or early 60s, who are carers or workers, or both. National insurance must reflect those trends. Were he alive today, William Beveridge would have looked at that issue when framing a social policy. We should do the same.
The fourth change is in the risks which people face in their lives, and the implications for national insurance and other parts of the social security system of family change and family breakdown. Looking again at the Beveridge report—as one does most evenings—one sees that Beveridge said little about one-parent families. He talked mainly about widowhood and the need to have a national insurance system to look after widows and the few widowers. The phenomenon of the large proportion of single unmarried mothers—probably 18 per cent. or almost one in five of our children live in one-parent families—is a key challenge for social security, as the Government recognise. What are the implications for national insurance? Are there any implications?
It is fascinating that Beveridge with his sexist view, as we would say now, of the role of men and of national insurance, nevertheless recognised that, when a marriage ended, a new risk of poverty was presented. He toyed with the idea in his report that perhaps a national insurance scheme should recognise the risks that many women faced when a marriage ended through no fault of their own, as he put it.
Beveridge could not frame detailed policies and, of course, the national insurance system, as opposed to other parts of social security, never recognised the risks of divorce. If the Beveridge questions about changes in family life and the risks that we face were asked today, a latter-day Beveridge would accept that almost four in 10 of recent marriages would end in divorce. More and more men and women, but particularly children, become victims of the social revolution and of family change. That

revolution has not been bloodless. How are we to socially secure people? Is it through social insurance, or through other aspects of social security?

Mr. Burns: Has the hon. Gentleman read Philip Ziegler's biography of Harold Wilson, in which the author goes into great detail on putting together the Beveridge report and Harold Wilson's work on it? I suspect that the hon. Gentleman may not like the answer that Beveridge would have come up with to the question that he is posing.
Given that Beveridge was very much a figure of the 1940s, would he not find the situation in Britain in the 1970s, 1980s and 1990s with regard to single-parent families somewhat incomprehensible?

Mr. Wicks: I understand the point that the hon. Gentleman is making, but Beveridge understood rather more than the hon. Gentleman implies. In the report, he said that a housewife's loss of home maintenance without her consent and not through her fault was one of the risks of marriage against which she should be insured, and that she should not depend on assistance. However, that did not lead to legislation.
The hon. Gentleman suggests that Beveridge would be disturbed by some of the family changes which affect us. I am sure that he would be disturbed. We should be disturbed that seven out of 10 one-parent families depend on income support. Eighty-five per cent. of one-parent families depend on income support at some stage. I am disturbed about that, because it leads to massive public spending which, in a better world, we would spend elsewhere. It also means that too many of our children and our citizens live in desperate poverty. With Christmas coming, I do not relish that fact. It is a challenge to us all. We not not be so far apart on that one.
In addition to the social changes that I have outlined, there have been changes in social security benefits such as the rise of non-contributory, non-means-tested benefits which challenge the concept of national insurance.
I end by repeating my plea. We could have a relatively narrow debate today on whether the 1 per cent. increase is too much or too little. We could argue about the benefits to be cut. However, unless we place the measure in a wider context, as my hon. Friend the Member for Garscadden has done, and unless we talk about the Government's vision and strategy for the future of national insurance when we face new risks in the light of social change, we shall not be able to debate and make the decisions on what many regard as a grey and boring area of public policy, but one that may have more impact on the life of our nation and the welfare of our people than even the GATT round.
We are discussing vital matters which affect millions of people, many of whom face enormous risks. I encourage the Minister to make a strong statement about the future of national insurance and its strategy today.

Mr. Nigel Evans: I am extremely grateful for the opportunity to speak in tonight's important debate. We have heard from hon. Members on both sides how important the welfare state is to Britain. It is the cornerstone for people who need benefits and require help from those who can afford to pay.

Mr. Flynn: The hon. Gentleman has illustrated a fundamental division between the two sides of the House. Beveridge wanted a system of national insurance in which


people paid contributions and claimed them back as a right. The hon. Member refers to a poor law scheme under which people had payments as a charity.

Mr. Evans: Obviously I disagree with the hon. Gentleman. The measures are a safety net for those in need; however, other Government policies provide a trampoline for people who want to spring up and help themselves. They represent a self-help philosophy, as well as supporting those who cannot help themselves.

Mr. Bates: My hon. Friend has touched on a key point. Is it not the case that the Labour party Social Justice Commission was instructed to consider whether we ought to means-test all benefits? Is that not at odds with the Beveridge principle about which we have heard so much?

Mr. Evans: I am grateful to my hon. Friend for that intervention. I am not sure where the Labour party thinks it is going or whether it knows where it is going on social security. I asked the hon. Member for Glasgow, Garscadden (Mr. Dewar) some questions and I did not receive sensible replies. When we ask what policies we could expect from the Labour party, we receive blank stares. One of my hon. Friends asked the hon. Member for Garscadden a specific question, but he was unable to respond.
The Government have increased massively the money being provided through the social security system. In 1979, it was just over £40 billion. We are now talking about £74·5 billion and rising, as the Government are absolutely certain to ensure that the increases will stay ahead of inflation to ensure that those on benefits will not suffer.

Mr. Heald: One of the criticisms by the right hon. and learned Member for Monklands, East (Mr. Smith), the Leader of the Opposition, was that the Conservative party is committing a fraud on the nation by abandoning the contributory principle. Yet David Blunkett said recently:
The Inland Revenue and Benefits Agencies should be amalgamated"—

Mr. Deputy Speaker: Order. The hon. Gentleman must do a little more homework and refer to the hon. Member for Sheffield, Brightside (Mr. Blunkett).

Mr. Heald: I was carried away with the exuberance of my own verbosity, and I apologise.
The hon. Member for Brightside said that we should abandon the contributory principle in favour of automatic eligibility. What does my hon. Friend consider to be Labour party policy on this?

Mr. Evans: My hon. Friend has put his finger on it. I am at a loss to establish what Labour party policy is. Labour Members are behaving like Liberal Democrats, in that they say one thing to one group of people and something else to another. Perhaps, before the end of the debate, the hon. Member for Garscadden, or another Labour Member, will explain to us in detail the Labour party policy on social security.
The social security system is the cornerstone of the welfare state, but the most important principle of the national insurance fund is that we pay out what we put into that fund.
One of the greatest commitments that the Government have made to national insurance and social security is to

the elderly. We have heard all sorts of things this evening from the Labour party about why the Government are spending more money on social security. Under the Conservative Government, people are living longer than ever before. That is another great achievement of the Conservatives.
The 14 years of Conservative government have witnessed a real increase in expenditure on benefits to pensioners of 33 per cent. Labour Members talk sincerely about caring for elderly people, but during their last period of office the increase was about 3 per cent. That shows the difference between the words of the Labour party and the action of a Conservative Government.
My hon. Friend the Member for Langbaurgh (Mr. Bates) reminded me that, on two occasions when the Labour party was in government, it stopped the Christmas bonus. It is useful to remind ourselves of that.
An increasing problem with national insurance is that, because people are living longer, there are far more people of pensionable age. When people reach retirement, they are living longer in retirement, so the bill is forever increasing.
The deficit which characterises the national insurance fund is made up by the Treasury grant which was mentioned as £7·5 billion for the current year. That has to come from the hard-earned money of taxpayers, and we are talking about hard-pressed budgets. That money could be used in other Departments, or even to help relieve the stress on the budget deficit.
The contributory benefits are available to all who contribute, so if the levels of benefit are uprated, surely it is reasonable to ask that the rise be reflected by a comparable rise in the contributions.
Benefits have been rising dramatically, while national insurance contributions have been frozen as a percentage for more than a decade. The readjustment of the level of contribution is inevitable, and must be keenly anticipated by anyone who favours sound economic policy as a foundation for our country. If we are to maintain benefits at their current satisfactory rates, more funding must be found.

Mr. Flynn: Will the hon. Gentleman give way?

Mr. Evans: I was talking about sound economics, and I would be rather surprised if anyone on the Opposition Benches knew anything about that.

Mr. Flynn: I sympathise with the hon. Gentleman. It is clear that the Government are fielding people who are reading their briefs and have no knowledge of social security. It is a great shame that we have not heard from the hon. Member for Havant (Mr. Willetts), who does know something about it.
Has the hon. Gentleman read the report published yesterday by the Social Service Advisory Committee—the Government's own advisers? After looking at several models of what is likely to happen in future, it stated that only by using the most pessimistic assumption will the percentage of GDP spent on social security rise to the year 2000.
The hon. Member for Havant also said that the demographic time bomb has been vastly exaggerated. Instead of listening to Conservative Members speaking from prepared briefs that they barely understand, why can we not hear from those who understand social security?

Mr. Evans: I gave way in the hope that I would hear something useful from the hon. Member for Newport, West (Mr. Flynn). I should have known better. It is a shame that the hon. Member still comes out with that sort of slur.
We feel strongly about the system of social security payments. We are here to ensure that the amount of money paid out of the national insurance fund will be met from the contributions of those people who pay into it. It is only in the Walt Disney world of designer socialism, in which the hon. Member for Newport, West lives, that other people pick up the tab.
There will come a time when the hon. Member will understand that the bill will have to be paid. He talks about more money for this sector and more money for that sector, but somebody has to pick up the tab. The Government have that responsibility, and that is why we are here this evening.

Mrs. Jane Kennedy: The hon. Member has spoken about the need to ensure that those contributing to the fund contribute enough to pay benefits. Why is it that the Government's proposals retain the ceiling on national insurance contributions, which throws the greatest burden on people on lower earnings?

Mr. Evans: I am grateful to my hon. Friend—to the hon. Lady. I almost said "my hon. Friend"—[HON. MEMBERS: "You did".] I would not like to put an end to her career within her party.
Are we getting closer to what the Opposition believe? Do they still have a policy to abolish the ceiling on upper earnings? That would mean, effectively, an increase in taxation for a lot of people earning more than £20,000 or £22,000 per annum. I was under the impression that the Labour party decided it would no longer go along with that policy. I will gladly give way to the hon. Member for Liverpool, Broadgreen (Mrs. Kennedy) if she will tell me what the Labour party's policy is in regard to the upper earnings limit, over and above a contribution of £430.

Mrs. Kennedy: It is a question of fairness and the importance of ensuring that people contribute fairly to the national insurance fund.

Mr. Evans: We will not get an answer to our question. The hon. Lady talks about fairness, but with these national insurance contributions, the Government have ensured that those on the lowest level of earnings pay nothing towards national insurance. People start to pay only above the £57 level. There is a £430 ceiling on national insurance contributions, and we are more than happy to stay with that.
A contributory factor in the Labour party's defeat at the last election is that its members paraded around the country and told people on modest incomes that they wished to put up their income tax by 10 per cent. and their national insurance contributions by 9 per cent. People would not tolerate that.

Mr. Bates: I may be able to help my hon. Friend about the information that he tried to get from Opposition Members. I asked the same question of the hon. Member for Dunfermline, East (Mr. Brown) during the debate on the Address. I asked him if he still stood by his policy of abolishing the upper earnings limit. His reply was:
Our policies are going before the Commission on Social Justice".—[Official Report,25 November 1993; Vol. 233, c. 597.]

Mr. Evans: That comes as no surprise to me. We will not get any answers to any of the questions that we ask the Labour party.
The Labour party was so embarrassed by the message that it paraded throughout the country during the last general election, that it decided to get rid of its shadow Chancellor and promote him to leader of the party. If that is what he said when he was shadow Chancellor, I cannot wait for the next election to find out what he will say as leader. He will get into all sorts of problems.
People on lower earnings will be protected. Only those earning more than £57 will pay national insurance contributions. Before Opposition Members uncharacteristically intervene yet again to say how hard done by people are because of the increase in national insurance contributions, they should know that, even with the increase, people earning approximately £130 a week will be paying lower national insurance contributions under the Government than they were under the last Labour Government, and will receive far more in benefits.
The Labour party's offerings on national insurance at the last election provided no surprises. If we ask people in the street what the Labour party means to them in taxation policies, we will be told that it stands for higher taxes.
The Labour party stands for economic stagnation and general colourless misery. It has no ideas about the economy, and that is one reason why Labour has been out of power for the past 14 years.

Mr. Deputy Speaker: Order. I do not mind how wide the debate is on social security, but we really ought to be debating social security and not general taxation.

Mr. Evans: I was trying to demonstrate that the problem with the message that the Labour party is trying to sell—whether it is about taxation or national insurance—is that, if the ceiling on the top rate of national insurance were removed, the two might as well be merged and called a general taxation, which would simply be increased by 20 per cent. for people earning over those modest levels.

Dr. Godman: Will the hon. Gentleman give way?

Mr. Evans: Let me make a little more progress.
The hon. Member for Broadgreen talked about removing the ceiling on national insurance contributions. Once a Government went above a certain level, they would have the problem of disincentives, which would encourage a brain drain, or a fame drain. People who earned a certain amount of money would want to look at the opportunities before them, particularly within the single European market. During the 1970s, under the last Labour Government, people were leaving the country in droves because of the high rates of tax and national insurance.

Mr. Fabricant: My hon. Friend is far too young to recall this, but in 1979 the top rate of tax was about 98p in the pound.

Mr. Deputy Speaker: Order. I have just ruled that general taxation matters are out of order.

Mr. Heald: The great rip-off in the Labour party's scheme to abolish the upper earnings limit was that it was prepared to agree that the people paying the highest contributions should get the highest earnings-related additions and long-term benefits. That was a complete abolition of the contributory principle. If it was not, there was no point in it.

Mr. Evans: I thank my hon. Friend for making that important point. It is clear that the contributory principle means nothing to the Labour party. It is interested only in grabbing as much money as possible from as many people as possible. It is not just the top earners who would be hit by increases in national insurance contributions: other earners would be hit by it or by other taxes.
As well as ensuring that as many people as possible contribute to the national insurance fund, we must ensure that those who ought to be contributing to it are doing so. A certain group of people tend to exploit loopholes in the system to avoid payment—whether of income tax or national insurance on eligible income. That includes the giving and receiving of non-pecuniary bonuses, in the full and certain knowledge that the purpose of such schemes is the avoidance of national insurance payments. That cannot be permitted; such loopholes must be blocked as much as possible.
We must deal with those who try to claim exotic goods as payment in kind instead of bonuses. Not only are such people avoiding national insurance payments; others who need the benefits are not receiving them.
In his Budget speech, my right hon. and learned Friend the Chancellor spoke of ensuring that such loopholes are filled; it is estimated that, by filling them, the Government will reclaim £15 million per week. Nor do I believe that it stops there. I believe that the cheats and fraudsters have had their day. This unwelcome industry is not new, but it has become increasingly conspicuous as the level of abuse has risen.
My right hon. Friend the Secretary of State has made his position absolutely clear on both the loopholes and the fraud. If we can tackle both, there will be far more money for those in need.

Dr. Godman: The hon. Gentleman has spoken of abuses of the system. Does he support the decision of Social Security Ministers not to pay invalidity benefit to women aged between 60 and 65, many of whom are suffering severe hardship? That decision contravenes a decision by a European Commissioner, who has said that the Government are in breach of EC directive 79/7, dealing with equality of payment of pensions to men and women.

Mr. Evans: I am sure that my hon. Friend the Minister will mention that in winding up.

Dr. Godman: What does the hon. Gentleman think?

Mr. Evans: I understand what the hon. Gentleman is saying; but given the kind of benefits that the Government are paying out, it is amazing that he should try to pick holes in certain cases. The Government are paying out a vast sum of taxpayers' and national insurance payers' money, and they are keen to ensure that it is targeted on those who desperately need it. I believe in that principle, and I am sure that the Government will continue to operate it.

Dr. Godman: What about all those women?

Mr. Evans: I wonder whether the hon. Gentleman is really interested in hearing what I have to say about cracking down on national insurance fraud. If not, perhaps I should proceed to my next point.
The Government have embarked on an anti-fraud strategy to ensure that the money in the national insurance system goes only to those who need and deserve it. That strategy is absolutely right.

Mr. James Clappison: The exchange that we have just heard illustrates the width of definition that sometimes applies to loopholes and fraud. However, many of our constituents—including both small business men and employees—will understand full well what my hon. Friend means. As people who play by the rules and pay their tax and national insurance contributions, they are caused great anxiety by such activities.

Mr. Evans: I thank my hon. Friend for making that point. It does not really matter whether we are talking about business men and others with money who try to avoid paying their dues, or about those who defraud the system; the net outcome is that the money is not going into the system to be paid to those who need the benefits.
We need to take fraud seriously, and the Government are doing so. They want to ensure that money lost through fraud is recovered: their current target is over £1 billion. It is very ambitious, but I believe that they can achieve it. They are considering the introduction of identity cards, and have already introduced bar coding.
I believe that the Bill is all about ensuring that those who need benefits receive them, and that those who are able to pay are made to do so. That is why I support it.

Mr. Archy Kirkwood: I am grateful for the opportunity to speak briefly in this important debate. If ever there was an argument against guillotine motions, it is provided by the requirement for Opposition Members to come in and make 25-minute speeches—all of them repeating the arguments of the last general election—during debate of a serious social security Bill. That has increased my distaste for the guillotine. I hope that the Minister will relay my view to the Government's business managers.
I believe that one of the most important principles enshrined in the contributory system set up by Beveridge is the principle of redistribution. What he was trying to achieve was not necessarily vertical redistribution, but redistribution throughout life: he sought to establish a system that would allow people to put away amounts to provide for untoward events such as sickness, invalidity, childbirth and old age during the economically active periods of their lives.
For the reasons stated so eloquently by the hon. Member for Glasgow, Garscadden (Mr. Dewar) and amplified by the hon. Member for Croydon, North-West (Mr. Wicks), I feel that the Bill takes a serious step towards eroding that important element in our present social security system. If the 1 per cent. that it introduces had been raised and redeployed to improve the organisation of the system of redistribution throughout the lifetime, I for one would have been very much in favour of it; but it does not.
As far as I can see, that 1 per cent. is an instrument of economic management, intended to deal with the public sector borrowing requirement. Of course I accept that there is a problem—

Mr. Fabricant: Will the hon. Gentleman give way?

Mr. Kirkwood: No. I want to allow as many other hon. Members as possible to speak, and I hope to make a short but relevant speech.
My objection to the Bill, then, is that it is intended to raise money for economic and financial purposes. The public sector borrowing requirement certainly needs to be


addressed, but it should be addressed in other ways. It is disingenuous, to say the least, to start tinkering with the national insurance contributory system in this way.
The Bill contains some tidying-up provisions—I think that that is the best way in which I can paraphrase the Minister's introductory remarks—in the form of changes in the formula for the element that goes from the national insurance fund to the national health service.
In parenthesis, I object strongly to clause 2(3), which makes those changes—not because I object to an important and beneficial clarification of the position, but because it is retrospective. If we look at the provision in detail, we see that it goes back to the Social Security Act 1989. It deals with amendments that
shall be deemed to have had effect as from the commencement of the 1992 Act"—
that is, the Social Security Administration Act 1992.
The Minister is relatively new to his job. Let me say to him what I have said to Social Security Ministers before him, and will no doubt say to his successors. The way in which we are scrutinising this legislation does not give us a proper opportunity to deal with the matters that I have raised.
It is black marks for the parliamentary draftsmen and departmental lawyers if they make mistakes allowing legislation to be capable of misinterpretation or misconstruction. If the Minister wishes to earn his pay as an Under-Secretary of State, he should go back to the Department and tear strips off those who produced this ambiguity. He should remind them of their duty to ensure that such things do not happen again.
Of course, our legislature has a duty to ensure that legislation is scrutinised properly; but guillotine motions do not help us to ensure that legislation is dealt with by the House in a proper and orderly fashion.
While welcoming the change, I think that it should not have happened in the first place. I consider that to be a serious point to which attention should be given.
The context of the debate is better informed as a result of the ninth report produced by the Social Security Advisory Committee. I quote from a press release dated 15 December:
In a final chapter
of the report,
the Report questions the view that social security spending"—
which comes from the national insurance fund—
is out of control, but suggests that a fair, adequate and affordable social security system for those in need is essentially the preservation of the social fabric of the nation.
I strongly believe that that is true.
If we are getting into some of the cruder and more ideological comments made by Tory Members behind the Minister about the need to curtail expenditure and so on, that is a proper matter for political debate. However, I would prefer to focus carefully, as the SSAC report does, on examining how we plan the future growth of social security expenditure. There is a debate to be had about the growth of social security spending in the past because I want to ensure that every penny is used properly.
To give an example, at my party's last conference it was decided that if there is to be an increase in the pension provision, that increase should be targeted at and linked to the earnings of those who are on income support and means-tested benefits. We are struggling to see how we can constrain the growth of social security spending from the national insurance fund.
There are some worrying implications in what Tory Members said about not believing in growth. I am prepared to argue about how we spend the growth in social security expenditure. However, if we are starting to talk about real cuts in social security provision, the SSAC report is right: we start looking at the "social fabric of the nation" and how it will be eroded.
If the Government do not pay through the benefit system, they will need to pick it up through criminality, drug abuse and all the other downstream effects that will result from taking money out of the pockets of those who need it most. I recommend the Social Security Advisory Committee report. I know that the hon. Members for Ribble Valley (Mr. Evans) and for Mid-Staffordshire (Mr. Fabricant) are experts on social security. I hope that they will examine the report.

Mr. Bates: rose—

Mr. Kirkwood: I will not give way.
There are some unfair, hidden tax increases in the Bill. The hon. Member for Garscadden deployed the case eloquently. I shall reinforce what he said, but I will not repeat his comments. The vast majority of people do not think all that far ahead. Low-income families have a week-to-week view of life, because that is the way in which their finances stretch. I do not think that they are properly apprised of the sort of difficulties they will face when the tax increases bite in the new financial year. To start thinking about increases of the level of £9 per week in 1994–95 and £16 per week in the 1995–96 fiscal year will not provide difficulties only for low-income families. It will bite into the disposable income that is available for middle-income families.
We tend properly to concentrate on financially disadvantaged households in social security debates, and it is right that we do so. But looking at the changes that will flow after 6 April 1994, I think that many middle-income families will have real difficulties. Although they may have reasonably big incomes in terms of their net take-home pay, they also have a corresponding level of commitments.
I do not know whether the Government have done any research on this. When they make changes of this magnitude, I certainly hope that they do research so that they can measure the exact impact of such changes on the balance of disposable income for middle-income families.
I am nervous about how the changes will play out for middle-income groups. I hope that the Minister will say something about that later. Low-income and middle-income families will find it difficult to cope with the totality of the tax increases—something like £15,000 million in 1995–96, and the national insurance increases provided in the Bill are about one sixth of that tax take.
Earlier, I said that, if the national insurance fund is increased, it should be increased in order that benefit expenditure can be correspondingly increased. In the Bill, we see changes in the benefits that are available. Those changes are an important element of it. The job seeker's allowance will be means-tested after six months.

Mr. Bates: The hon. Gentleman has made some prize comments about the speeches of my hon. Friends. I draw his attention to something that he said:
The national insurance contribution system is now so shot through with anomalies and piecemeal reforms that we should start again from scratch."—[Official Report, 30 November 1992; Vol. 215, c. 73.]
Is that still the hon. Gentleman's view?

Mr. Kirkwood: I know I should not have given way, because the hon. Gentleman has anticipated the final part of my speech.
I said that the Bill provides for cuts in benefit. The job seeker's allowance will be means-tested after six months. Sickness benefits and invalidity benefit will be translated into incapacity benefit. That benefit will be liable to tax, and there will be tighter medical tests.
Another matter that must be taken into account is that the age of eligibility for the state pension for women is being changed to 65 years. As hon. Members know, that is being phased in between the years 2010 and 2020. Savings are being made simultaneously with an increase in national insurance contributions of about £2.5 billion by 1996–97 for the job seeker's allowance and the sickness benefit and invalidity benefit changes, and about £5,000 million by the year 2025 for the change in the pension age. Increasing national insurance contributions at the same time as making those swingeing reductions in benefits is adding insult to injury.
Anyone who studies objectively the imbalance that has occurred in the national insurance fund can see clearly that it has been occasioned by a combination of lower earnings and increased unemployment. The obvious answer to that strays outside the scope of this debate. Urgent attention is needed to promote growth and generate more employment.
I ask the Minister to consider that one of the consequences of the increases will be that people will start to examine ways of getting round them. There are many benefits in kind which do not apply to national insurance contributions. I shall list a few of them for the Minister's consideration. For example, company cars, beneficial loans, private medical and dental attention, general expenses allowances, travel and subsistence allowances, entertainment, home telephone expenses which are paid or reimbursed and mobile telephone expenses escape national insurance contributions.
If the Government are going down the road of not increasing general taxation—I think that would be a much more honest and straightforward way of raising public expenditure— they will need seriously to examine some of the benefits in kind which people will start to use or misuse in the future. We should pay attention to that matter.
I should like to conclude by considering the future of the contributory principle of the national insurance fund, as I promised the hon. Member for Langbaurgh (Mr. Bates). I agreed with what the hon. Member for Croydon, North-West (Mr. Wicks) said in his interesting speech. He knows a great deal about the subject, and we have had many discussions about it over the years.
I believe that we need to reform the national insurance contributory fund fundamentally. My opinion is reinforced by the Bill, because it is quite unforgivable for the Government to raid the national insurance fund in this way.
I know that any reform would take time and would be difficult to introduce. It would take some explanation for people to understand that they no longer had entitlement to benefits. We must, however, consider how we plan to finance social security expenditure. There is a case for doing away with the contributory principle.
We should be more honest and say that the future system should be based on a pay-as-you-go principle. The necessary money should be taken out of general taxation. That would make it easier for Governments of whatever political stripe to make better future provision, which is intelligible to ordinary people.
The Bill is important. It deserves serious scrutiny, and I am sorry that it has been guillotined. The Government, however, have not made their case properly, although I believe that it is difficult for them to make a legitimate case for increasing the costs of employees through their national insurance contributions while using other mechanisms to reduce the benefits available through that very same fund.

Mr. Oliver Heald: I do not pretend to be an expert in social security, but it would be a poor day if hon. Members could not consider legislation that is important to their constituents unless they were experts in it. I found the comments of certain Opposition Members extremely patronising.
It particularly ill behoves the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) to make such comments when his party cannot come up with a consistent policy if it tries. In the Budget debate, the Liberals' Treasury spokesman, the right hon. Member for Berwick-upon-Tweed (Mr. Beith) emphasised the importance of the contributory principle, but the hon. Gentleman has just suggested that it should be abolished. That inconsistency demonstrates that we are back on the old Liberal game of a thousand blooms on every branch.
What has been startlingly absent from the debate is an appreciation of the difficulties of funding the type of system that we want for the future. I asked the hon. Member for Glasgow, Garscadden (Mr. Dewar) how he would fund the deficit in the national insurance fund. He did not offer a proper answer but gave a bit of fudge here and a bit of mudge there. It is all very well to speak in lofty tones about Beveridge, full employment and other vital issues, but if one cannot say where the money for all that will come from, one is dead.
In the 1992–93 report, the Government Actuary said that the fund required extra money and that one way of providing that would be to increase national insurance contributions. There may be alternative means of raising that money, but the Opposition cannot criticise the Government's proposals in the Bill unless they have such an alternative.
It is not right to argue that full employment will be provided by increasing benefits. When Beveridge looked at the system he said that the starting point was full employment. These days, those countries with full employment are not those with the most over-weighty social and welfare provisions; they include Japan and Taiwan, not France and Germany. Today in Europe, 20 million people are unemployed. We must consider the future. If we want to return to full employment, we must ask ourselves how to achieve that. One way of doing so is to keep the social burden off employers' backs.

Ms Ann Coffey: Such as sick pay.

Mr. Heald: I did not catch that sedentary intervention.
We are trying to remove the burdens on business so that it can be more competitive. Every major employers' group argues that that is necessary. Opposition Members argue that employees' national insurance contributions should remain at their low level, but that is not possible to achieve unless we increase taxation. If we did that, it would be extremely damaging to British industry.
It is typical that the overlap between national insurance payments for unemployment benefit and income support


hardly rates a mention in Opposition Members' speeches. Of those who are unemployed and receiving benefit, 70 per cent. are on income support. The rules governing income support and unemployment benefit are inconsistent, cumbersome and dealt with by different offices. Surely it is right that that system should be reformed. I cannot believe that Opposition Members would disagree.
The Government have grasped the nettle to make that change and, at the same time, they have targeted the new job seeker's allowance in order to help people to get back to work. It is not as though anyone will lose as a result of that; rather they will gain, because the job seekers agreement will set them clear targets. The hon. Member for East Kilbride (Mr. Ingham) may smile, but the success of the job club scheme shows that such measures work. Under the job seeker's grant, people will be given the help they need to go out to look for work.

Mr. Wicks: Is there not an inconsistency in the hon. Gentleman's argument? He seemed to argue that mass unemployment is now a fact of life and that, as testimony to that, it exists in foreign parts. He also supports the idea of the job seeker's allowance. Surely the notion behind it is that there are enough jobs out there to be sought, if only we got the benefits and the help right. The hon. Gentleman cannot have it both ways. Does he see a future of mass unemployment or does he genuinely believe that we can provide a system under which people can not only seek jobs but find them?

Mr. Heald: I am optimistic about the future, so long as we take the right measures. We must remove the burdens from business and train young people and those in work. We should give them the help that they need to find the jobs for which they are suited. The Government are taking such measures, but too often without the support of the Opposition. Their support should be forthcoming because those measures are in the interests of everyone.
When the Labour party was in office, its record on national insurance was appalling. Under the Labour Government, employers' national insurance contributions stood at 13.5 per cent. and those of employees stood at 6.5 per cent. According to today's national insurance figures, someone earning £70 a week would, under Labour, have total costs of £14, whereas under the Conservatives that person costs £4.96. Under Labour, someone earning £130 would have total national insurance costs of £26, whereas under the Conservatives he costs £15. That shows that the Conservatives have removed the burden from businesses.
The Labour party has not changed its spots. One need only study the shadow Budget, produced before the general election, to see that, because it proposed to remove the upper earnings limit. That would have meant that people who would have to pay higher contributions would be ripped off because they would not get the earnings-related addition to which they were entitled. That proposal was also fundamentally unpopular because people do not want to pay higher taxes. They want a liberated economy in which taxes are lower so that they can reap the benefits of their enterprise.

Mr. Wicks: The comparisons with the previous Labour Government are helpful. Can the hon. Gentleman inform the House of the cost of public spending on unemployment under that Labour Government compared with the costs under the Conservative Government? Would he care to speculate about how high expenditure on unemployment

now impacts on taxes? What is the overall burden of taxes on the average family now compared to what it was under the Labour Government?

Mr. Heald: I do not think that I shall have time to do that. I shall be happy to discuss that afterwards with the hon. Gentleman. If we had a socialist Government in the country now, we would have the same sort of system as in socialist countries abroad. If one considers what is happening in France—high unemployment and rising youth unemployment—it is not difficult to see that we do not want that in Britain, and that we must continue with the vigorous policies of this Conservative Government.

Mr. Keith Bradley: The Second Reading speeches have been somewhat uneven and they have been worsened by a guillotine on this important Bill. In the time that we have available, we cannot go down the route of further criticism of that Government decision, but it has rather curtailed an important debate that I hope that we can continue in Committee.
The speeches by some hon. Members have been extremely eloquent and thoughtful. I pay tribute to my hon. Friend the Member for Croydon, North-West (Mr. Wicks) especially, as well as to my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) who opened the debate.
In the short time available I would like to reinforce some of the points that have been made and to demand answers to some of the questions that have been asked, which I would like the Minister to answer in winding up. It is important to note that most people in the country believe that the national insurance scheme is a partnership between the individual and state. Most individuals who contribute to the scheme do so on the understanding that it establishes, in principle, their entitlement to benefits if earnings are interrupted. The average man or woman, who has contributed to the fund during their working life, is being conned by the Government. The view of national insurance as a tax equivalent means that, contrary to the theory, the Government are able to increase contributions without introducing corresponding increases in benefits and, at the same time, erode the value of those benefits.
As we have heard, this one-clause Bill is about the 1 per cent. increase in national insurance contributions from 9 to 10 per cent. and is on top of the previous increase in the standard rate of national insurance contributions from 6·5 per cent. to 9 per cent. and the abolition of the ceiling on employers' contributions. Overall, the amount raised in contributions has increased relative to other forms of tax and in terms of the percentage charged on most earnings. Much of this year's tax revenue will come from higher national insurance contributions and, as we know, the 1 per cent. increase in rates for employees and the self-employed will raise a staggering £2·26 billion in revenue in a full year. Significantly, that is £360 million more than a penny rise in the basic rate of income tax.
National insurance is a regressive tax and will hit those much lower down the income scale than income tax, so that half a million people who are too poor to pay income tax will nevertheless pay national insurance. As we have already heard, a good example of that is the nursing auxiliary who earns around £6,000 a year and will pay an extra 38p a week in national insurance. However, if there were a penny rise in the basic rate of tax, that person would pay absolutely nothing more.
The Government explain the increase in terms of the cost of contributory benefits. They put forward the view that it is right, in principle, that existing contributions should pay for contributory benefits. I do not dissent from that view. However, it is interesting to note that, in an interview on "Newsnight" in July, the Secretary of State for Social Security admitted that he had great sympathy with people's gut feeling of having paid for something through their national insurance contributions. Yet that has not prevented the Government from reducing the real value of national insurance benefits time and again since 1979.
For example, the flat rate pension has been degraded by indexing its growth to prices rather than wages.

Mr. Heald: Will the hon. Gentleman give way?

Mr. Bradley: I shall give way once.

Mr. Heald: The hon. Gentleman will obviously remember the point that I made—how would the fund be paid for in future? Is the hon. Gentleman saying that Labour would reintroduce the link with earnings and, if so, how would it pay for it?

Mr. Bradley: We have heard the Back-Bench Conservative Members attacking the Labour party time and again. We are debating a Government measure. The Government have time and again broken their manifesto commitments—on VAT on fuel, on mortgage tax relief and on home insurance. We are here to debate Government policies and I intend to do so.
The House of Commons Library has estimated that the process of degrading pensions has knocked £19 off the value of a single pension. Had the same process been practised since 1948—we have heard much of Beveridge —today's single pension of £56·10 would be worth only £23 a week. Imagine an elderly person trying to live on that; yet, that is now the Government's chosen course.
The build-up of earnings-related supplements has also been virtually eliminated. The earnings-related supplement paid with unemployment benefit was abolished in 1992, while child dependency additions were abolished in 1984.
While SERPS entitlements remain, the adequacy of them is far from assured. Research shows that under the current rules, a person with a lifetime average earnings equal to the national average for males and retiring after 2009, would retire on a combined flat rate and a SERPS pension equal to 33 per cent. of gross earnings. That compares favourably with gross replacement rates of around 56 per cent. in Germany and between 59 per cent. and 71 per cent. in France. If the national insurance pension follows the declining course that is projected by Government's own figures, it is estimated that the gross replacement value for a state retirement pension will fall to between 33 per cent. and 27 per cent.
On top of all that, eligibility for benefits has become harder for individuals to establish. Partial benefits in return for a partial contribution have been virtually abolished. Payment of reduced rates of unemployment benefit for those with less than a full contribution record was abolished in 1986 and qualification for short-term benefits has been made more difficult by a recent contribution record via paid employment now being absolutely essential.
Numerous new regulations have been imposed to disqualify the jobless from receiving benefit. Unlike income tax, national insurance contributions which are overpaid—in that they are not sufficient to meet the declining eligibility for benefit—are not refunded and therefore a person wastes their individual contributions.
We have also heard questions about the new job seeker's allowance, which is the latest change that the Government are making to break the link between contributions paid and the rights to a contributory benefit. The allowance reduces the entitlement to benefit from 12 months to six months, which will remove 90,000 people from entitlement to any benefit after six months—50,000 men and 40,000 women. The means test involving six months rather than one year means that people will also lose entitlement to benefit as a result of spouses' earnings.
We must ask serious questions on that. Will the Secretary of State confirm whether there will be additional payments for adult dependants with the contributory job seeker's allowance? Will he clarify the plans to base the rate of the job seeker's allowance on income support rates for those under 25 years? Does not that mean that there will be a reduced rate of benefit for all unemployed people under the age of 25 years, as pointed out by my hon. Friend the Member for Garscadden? We need clear answers to those questions.
The new incapacity benefit will be taxable and subject to more stringent medical tests than is the case for invalidity benefit. It will be harder to get than invalidity benefit and it will be paid at a lower level. Will the Minister explain the principle that lies behind this contributory benefit? Two people living in the same street, in the same financial and social circumstances, and in the same physical state, could receive two different benefits. One could receive invalidity benefit and the other could receive a substantially reduced incapacity benefit. One benefit is taxed whereas the other is not. That will not only make a farce of the contributory principle, but will be a slap in the face of social justice.
Like my hon. Friend the Member for Garscadden, I raise the point about the future of the basic pension, which we have mentioned already. I refer to the recent comments by the Chief Secretary to the Treasury which may confirm our worst fears about the future of the pension. If his comments are anything to go by, no one under the age of 40 should expect to have a state pension on which to rely in old age. I know that that view differs from the Chancellor's view. Will the Minister make clear tonight on which side of the debate the Social Security team sits? Do the Secretary of State and his team support the undying principle of basic pension or do they support the Treasury team's view that it will ultimately wither and die, and that everyone will make alternative provision? Where do the Secretary of State and his team stand on that matter?
All the cuts have been made in spite of the increase in national insurance contributions, which the Government claim has occurred to pay for contributory benefits. People are effectively told to keep on paying higher national insurance contributions, but not to expect anything in return. Understandably, such a policy is a cause for concern for those anxious about their future security. People must wonder where their years of contributions are rapidly disappearing. At the least, people should be informed of the reality of national insurance contributions,


which is that they provide the Government with a means of raising taxation by the back door. They have little to do with the national insurance scheme as people understand it.
People can no longer have confidence in the Government's claim to be the party of low taxation. Over and over again, the promises made in the election about the Conservatives the party of low taxation have been broken. The Tory manifesto says:
We will maintain mortgage tax relief.
What have we had? The value of mortgage tax relief has been reduced in this Budget since the election. The manifesto says:
We are the only party that understands the need for low taxation.
What has happened? We have had the biggest hike in taxation in history. We have had the biggest hike of 7p in the pound, to which the Chancellor himself has admitted. People will be paying on average an extra £9 a week in taxation next year and an extra £16 a week the year after. They need an explanation.
We will oppose the Bill tonight because the changes in national insurance contributions are part of the way in which the Government are getting out of the hole caused by their economic mismanagement. The changes are a way in which to try to dupe the public into believing that national insurance is making a contribution to real benefits in the future rather than an effort to plug a hole in the Government's finances.

The Parliamentary Under-Secretary of State for Social Security (Mr. William Hague): For the second day running, we have had an interesting debate, with many varied contributions. I shall try to answer many of the detailed points put throughout the debate, including the questions asked by the hon. Member for Glasgow, Garscadden (Mr. Dewar).
The hon. Gentleman began his speech with a number of clear truths. He said that it was a short, simple Bill; indeed it is. He said that it could be argued that the Bill was needed simply to pay for increased expenditure out of the national insurance fund. He said that, in a sense, that was true. It is true in every sense.
The Bill's purpose is to bring the national insurance fund nearer to balance. The expenditure of the national insurance fund is much higher than its income—£5 billion higher. Its expenditure next year will be higher than it has been in the current year. The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) said that national insurance contributions should be increased only so that expenditure on benefits out of the fund could be increased. That is the purpose of the increase. Expenditure out of the fund will be higher in 1994–95 than in 1993–94. That is why we seek to put more money into the fund for the financial year 1994–95.
The hon. Member for Roxburgh and Berwickshire raised a point about the retrospective provisions in clause 2. Interestingly, he was the only hon. Member to raise that point—a point that we shall remember when we deal with some of the amendments in Committee. Like him, I am not enthusiastic about retrospective legislation. The provisions arise from the Social Security Act 1989, in which a drafting error was clearly made. There was an error by the Government and then an error by Parliament in passing the Act.
I welcome the hon. Gentleman's recognition that a change needs to be made. It needs to be made to give proper legal cover for the money that passes out of the national insurance fund to go towards the costs of the national health service. Ministers decided, as soon as we were aware of the mistake, that we should take the first opportunity to correct it. That is what we are doing in the Bill and that aim should be supported by the whole House.
The hon. Member for Roxburgh and Berwickshire also raised the important questions of benefits in kind and differences between the income tax system and the national insurance contributions system. He may have seen the recent report of the tax and national insurance contributions working group which was established by my right hon. Friend the Secretary of State.

Mr. Kirkwood: indicated dissent.

Mr. Hague: The hon. Gentleman obviously has not seen it; I strongly commend it to him because it makes extremely good reading. My right hon. Friend published the report in October. One of the working groups's main suggestions was that the definition of earnings should be aligned on the tax base, which would make subject to national insurance contributions all taxable benefits in kind and any vouchers regarded as earnings for tax purposes. We intend to consult the business community far more widely about the proposals next year and to discuss how they might be implemented. The working group outlined several different ways in which one might approach the alignment of the two systems. We recognise the importance of what the hon. Gentleman has said; he made an entirely valid point.
My hon. Friend the Member for Mid-Staffordshire (Mr. Fabricant) made an entertaining and well-informed speech, drawing in much detail from the briefing used to a much greater extent by Opposition Front-Bench spokesmen. Yesterday, they used CBI briefings; today, they employed briefings from the Conservative research department. I do not know what has gone wrong with the services of Labour party headquarters. Clearly, they are not supplying much material to Labour Members at the moment.
My hon. Friend the Member for Mid-Staffordshire pointed out that, after the increase, the lowest-paid would still pay lower national insurance contributions than the contributions that they paid in 1979. That is an extremely important point. He also reminded the House that the Bill reflected the Government's commitment to sound finance, a commitment that was also clear in the Budget.
The hon. Member for Croydon, North-West (Mr. Wicks) made a thoughtful speech, as the hon. Member for Manchester, Withington (Mr. Bradley) said. I did not agree with all of it. He said, for example, that the basis of indexation of pensions increases should not have been changed. We all have to consider that the implication of not changing the basis of indexation would be that expenditure from the national insurance fund would be £8·5 billion more than it is today. The hon. Gentleman and the Labour party in general must consider how they would have financed that increase through the 1980s. That is the problem that the hon. Member for Roxburgh and Berwickshire had at his party conference. He was overruled by the Liberal Democrats of the nation, despite his insistence on a particular pensions policy.
The hon. Member for Croydon, North-West referred to the future state pension age. There are powerful reasons for


equalisation at 65, including the position of occupational pension schemes, international trends and the need to ensure that the system is affordable in the future. That issue runs through many of our deliberations about the national insurance fund and the social security system. It is our responsibility to ensure that the system is affordable in the future. Although some hon. Members argued that there should be no difficulty with that, the simple projection is that, although expenditure on pensions is just under £60 billion a year now, it is likely to be more than £60 billion in the 2020s and 2030s. That is only on the basis of indexation with prices. Those issues must be borne in mind.
The hon. Member for Croydon, North-West made two important points. One was about the level of unemployment in the future. He asked how much we could predict the future level of unemployment. My hon. Friend the Member for Chelmsford (Mr. Burns) pointed out the difficulties faced by economists in forecasting future levels of employment. All that we do in the Government forecast is make stylised assumptions about the needs for next year. The assumption for next year is 2.75 million. Today, unemployment fell to lower than the stylised assumption in the Government's forecast. That is the limit of what we can forecast in calculating what we need next year, and for the national insurance fund, which is what the debate is about.
My hon. Friend's most important point was to show how the social security system needs to change over time. There is a fair amount of common ground in some parts of the House on the idea that the system needs to change and evolve, and sometimes to be reformed. Sometimes it has to be refocused. We have to check that it is meeting the needs of society in the right way. That has important implications for the national insurance fund.
The national insurance fund cannot be compared to a single-risk commercial insurance system. It cannot operate like a funded insurance system in which a specific contribution buys an absolute right for ever to a specific return. The national insurance fund is a pay-as-you-go system which relies on the ability of current contributors to pay in a sufficient amount to provide for expenditure on benefits which are currently payable. Social security schemes must be able to evolve, and as such, any Government must be able to make adjustments to the structure of the system to meet changing circumstances.
That is the point with which many people agree, including the hon. Members for Birkenhead (Mr. Field) and for Croydon, North-West and the Government. The only people who do not recognise that the social security system sometimes needs to be reformed are Opposition Front-Bench Members who, in these debates, often remind me of the Duke of Wellington in 1832 telling the other place that the British constitution had been created so perfectly in the first place that no improvement on it could possibly be devised.
Yesterday, Opposition Front-Bench Members came to the House to defend the statutory sick pay system, the establishment of which they opposed 10 years ago. They have opposed every change to it. There they sit, glumly, a range of exhausted volcanoes, unable to come up with any ideas for the future, having privatised that activity and farmed it out to the Commission for Social Justice.

Dr. Godman: When will the English Court of Appeal hear the appeal lodged by the Secretary of State and the chief adjudication officer against the decision taken by Commissioner Skinner on 1 April 1992 about the payment of invalidity benefit to women aged between 60 and 65? Is it likely that the Secretary of State will seek a referral to the European Court of Justice?

Mr. Hague: On 26 July, the Court of Appeal adjourned the hearing of the appeal, which will now take place on either 14 of 15 February 1994. The listing of the hearing date is a judicial matter for the Court of Appeal. Obviously, we shall have to await the outcome before we decide how to proceed.

Dr. Godman: Will the Minister give way?

Mr. Hague: I must press on with the rest of my speech. I was referring to the need for change—

Dr. Godman: On a point of order, Mr. Deputy Speaker. May I point out that I suspect that the Minister, adventitiously, is misleading the House, because the Secretary of State and the chief adjudication officer asked for the postponement?

Mr. Hague: If I am misleading the House, I am certainly not doing so deliberately, but I am happy to talk about the matter. I gave the hon. Gentleman a straight answer and I shall be happy to discuss it with him on all other occasions.
Let us return to the Bill and to its purpose. It recognises that any responsible Administration must take action to ensure that they meet commitments and obligations, such as to pay pensions and to pay the benefits that come out of the national insurance fund. It is critical to ensure that enough money goes into that fund to pay those benefits.
It is important to recognise, when we make the change that we are debating tonight, that we have greatly improved the national insurance system since 1979. We have introduced a 2 per cent. rate that applies under the lower earnings limit for the lower paid. We have made huge reductions in the national insurance contributions paid by employers, which were a tax on jobs in 1979 of 13·5 per cent. The contributions are now 3·6 to 10·2 per cent. and are lowest for the lowest paid.
Opposition Members are often content to mouth concern about the low-paid, but tax them out of work when they get into power. Has it ever occurred to them that one reason why unemployment is falling, to the utter astonishment of economists and Opposition Members, is that we do not have a tax on jobs to the extent that we had in the 1970s under Labour Governments?
Let us compare the total level of employees' and employers' national insurance contributions in 1979 and now. Next year, the employers' and employees' contibution for someone earning £250 a week will be £46. What was it in 1979? Opposition Members should know. It was £50. What about the low-paid? For someone on £130 a week, the contribution next year will be £16. The contribution in 1979 was £26. Let us look at the really low-paid. For someone on £70 a week, the contribution next year is £5. In 1979, it was £14. That is how the level of national insurance contributions has changed over that time.
Opposition Members have failed to face up to the fact that if one does not pay for national insurance benefits by


increasing the income of the national insurance fund directly, one must pay it in some other way. That is a truth that they shy away from and do not like to discuss.
We waited to hear in the speeches of Opposition Front-Bench Members what their proposals were. The hon. Member for Garscadden referred to a larger Treasury grant, as though it were a huge pot of money into which hon. Members or Governments could dip their sticky fingers whenever they wanted. The Treasury grant can be increased only if the extra money comes out of other forms of taxation.
The Opposition have said that they are opposed to an increase in national insurance contributions, but they have set no alternative before the House. They have come here with a sense of grievance and outrage at the measure. The sense of outrage is so strong that when the hon. Member for Garscadden launched his speech, fully 14 of his hon. Friends made the long journey to the Chamber to hear his attack. It was an attack so impressive and dramatic in its content that 10 of his hon. Friends were still here at the end of his remarks. That shows the intensity of the outrage felt by Opposition Members.
How would the hon. Gentleman fill the gap? Would he raise the money in a different way? Would he abolish the upper earnings limit, as the hon. Member for Liverpool, Broadgreen (Mrs. Kennedy) suggested? Evidently, she did not clear her lines with Opposition Front Benchers, who say that that is no longer appropriate, that they have modernised their policy. They will have to modernise one or two of their Back Benchers if they are to make their argument stick together.
Would the Opposition pay for it from general taxation? Perhaps they would, but they forget that a large percentage of pensioners pay general taxation. Why should pensioners have to pay for the contributory benefits for which they have paid throughout their working lives? There is a powerful case for having contributory benefits funded by people who pay national insurance contributions.
Would the Opposition fund the system by closing a loophole? The hon. Member for Garscadden referred to a loophole—the idea put about by the shadow Chancellor that everything, including the funding of the national insurance fund, the general burden of taxation and every crackpot project thought up by Labour Members, can be funded by closing some vast and previously unsuspected loophole that has escaped the attention of everyone else in the nation, and of every Chancellor in recent decades.

It being three hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question already proposed from the Chair, pursuant to the Order [14 December].

The House divided: Ayes 310, Noes 259.

Division No. 54]
[8.10 pm


AYES


Ainsworth, Peter (East Surrey)
Baker, Rt Hon K. (Mole Valley)


Alexander, Richard
Baker, Nicholas (Dorset North)


Alison, Rt Hon Michael (Selby)
Baldry, Tony


Allason, Rupert (Torbay)
Banks, Matthew (Southport)


Amess, David
Banks, Robert (Harrogate)


Ancram, Michael
Bates, Michael


Arbuthnot, James
Batiste, Spencer


Arnold, Jacques (Gravesham)
Bellingham, Henry


Arnold, Sir Thomas (Hazel Grv)
Bendall, Vivian


Ashby, David
Beresford, Sir Paul


Aspinwall, Jack
Biffen, Rt Hon John


Atkinson, David (Bour'mouth E)
Blackburn, Dr John G.


Atkinson, Peter (Hexham)
Bonsor, Sir Nicholas





Booth, Hartley
Gardiner, Sir George


Boswell, Tim
Garel-Jones, Rt Hon Tristan


Bowden, Andrew
Garnier, Edward


Bowis, John
Gill, Christopher


Boyson, Rt Hon Sir Rhodes
Gillan, Cheryl


Brandreth, Gyles
Goodlad, Rt Hon Alastair


Brazier, Julian
Goodson-Wickers, Dr Charles


Bright, Graham
Gorman, Mrs Teresa


Brooke, Rt Hon Peter
Gorst, John


Brown, M. (Brigg & Cl'thorpes)
Grant, Sir A.(Cambs SW)


Browning, Mrs. Angela
Greenway, Harry (Ealing N)


Bruce, Ian (S Dorset)
Greenway, John (Ryedale)


Budgen, Nicholas
Griffiths, Peter(Portsmouth, N)


Burns, Simon
Grylls, Sir Michael


Burt, Alistair
Gummer, Rt Hon John Selwyn


Butcher, John
Hague, William


Butler, Peter
Hamilton, Rt Hon Archie(Epsom)


Butterfill, John
Hampson, Dr Keith


Carlisle, John (Luton North)
Hannam, Sir John


Carlisle, Kenneth (Lincoln)
Hargreaves, Andrew


Carrington, Matthew
Harris, David


Carttiss, Michael
Haselhurst, Alan


Cash, William
Hawkins, Nick


Channon, Rt Hon Paul
Hawksley, Warren


Chapman, Sydney
Hayes, Jerry


Churchill, Mr
Heald, Oliver


Clappison, James
Heathcoat-Amory, David


Clark, Dr Michael (Rochford)
Hendry, Charles


Clarke, Rt Hon Kenneth (Ruclif)
Heseltine, Rt Hon Michael


Clifton-Brown, Geoffrey
Higgins, Rt Hon Sir Terence L.


Coe, Sebastian
Hill, James(Southampton Test)


Colvin, Michael
Hogg, Rt Hon Douglas (G'tham)


Congdon, David
Horam, John


Conway, Derek
Hordern, Rt Hon Sir Peter


Coombs, Anthony (Wyre For'st)
Howard, Rt Hon Michael


Coombs, Simon (Swindon)
Howarth, Alan(Stat'rd-on-A)


Cope, Rt Hon Sir John
Howell, Rt Hon David (G'dford)


Cormack, Patrick
Howell, Sir Ralph (N Norfolk)


Couchman, James
Hughes Robert G.(Harrow W)


Cran, James
Hunt, Rt Hon David (Wirral W)


Currie, Mrs Edwina (S D'by'ire)
Hunt, Sir John (Ravensbourne)


Curry, David (Skipton & Ripon)
Hunter, Andrew


Davies, Quentin (Stamford)
Hurd, Rt Hon Douglas


Davis, David (Boothferry)
Jack, Micheal


Day, Stephen
Jackson, Robert (Wantage)


Deva, Nirj Joseph
Jenkin, Bernard


Devlin, Tim
Jessel, Toby


Dicks, Terry
Johnson Smith, Sir Geoffrey


Dorrell, Stephen
Jones, Gwilyam (Cardiff N),


Douglas-Hamilton, Lord James
Jones, Robert B.(W Hertfshr)


Dover, Den
Jopling, Rt hon Michael


Duncan, Alan
Kellett-Bowman, Dame Elaine


Duncan-Smith, Iain
Key, Robert


Dunn, Bob
Kilfedder, Sir James


Durant, Sir Anthony
King, Rt Hon Tom


Dykes, Hugh
Knapman, Roger


Eggar, Tim
Knight, Mrs Angela (Erewash)


Elletson, Harold
Knight, Greg (Derby N)


Emery, Rt Hon Sir Peter
Knight, Dame Jill (Bir'm E'st'n)


Evans, David (Welwyn Hatfield)
Knox, Sir David


Evans, Jonathan (Brecon)
Kynoch, George (Kincardine)


Evans, Nigel (Ribble Valley)
Lait, Mrs Jacqui


Evans, Roger (Monmouth)
Lang, Rt Hon Ian


Evennett, David
Lawrence, Sir Ivan


Faber, David
Legg, Barry


Fabricant, Michael
Leigh, Edward


Fairbairn, Sir Nicholas
Lennox-Boyd, Mark


Fenner, Dame Peggy
Lester, Jim (Broxtowe)


Field, Barry (Isle of Wight)
Lidington, David


Fishburn, Dudley
Lightbown, David


Forman, Nigel
Lilley, Rt Hon Peter


Forsyth, Michael (Stirling)
Lloyd, Peter (Fareham)


Fowler, Rt Hon Sir Norman
Lord, Michael


Fox, Dr Liam (Woodspring)
Luff, Peter


Fox, Sir Marcus (Shipley)
Lyell, Rt Hon Sir Nicholas


Freeman, Rt Hon Roger
MacGregor, Rt Hon John


French, Douglas
Maclean, David


Fry, Peter
McLoughlin, Patrick


Gale, Roger
McNair-Wilson, Sir Patrick


Gallie, Phil
Madel, David






Maitland, Lady Olga
Skeet, Sir Trevor


Major, Rt Hon John
Smith, Sir Dudley (Warwick)


Malone, Gerald
Smith, Tim (Beaconsfield)


Mans, Keith
Soames Nicholas


Marland, Paul
Speed, Sir Keith


Marlow, Tony
Spencer, Sir Derek


Marshall, John (Hendon S)
Spicer, Sir James (W Dorset)


Marshall, Sir Michael (Arundel)
Spicer, Sir James (S Worcs)


Martin, David (Portsmouth S)
Spink, Dr Robert


Mates, Michael
Spring, Richard


Mawhinney, Dr Brian
Sproat, Iain


Merchant, Piers
Squire, Robin (Hornchurch)


Milligan, Stephen
Stanley, Rt Hon Sir John


Mills, Iain
Steen, Anthony


Mitchell, Andrew (Gedling)
Stephen, Michael


Mitchell, Sir David (Hants NW)
Stern, Michael


Moate, Sir Roger
Stewart, Allan


Monro, Sir Hector
Streeter, Gary


Montgomery, Sir Fergus
Sumberg, David


Moss, Malcolm
Sweeney, Walter


Needham, Richard
Sykes, John


Nelson, Anthony
Tapsell, Sir Peter


Neubert, Sir Michael
Taylor, John M. (Solihull)


Newton, Rt Hon Tony
Taylor, Sir Teddy (Southend, E)


Nicholls, Patrick
Temple-Morris, Peter


Nicholson, David (Taunton)
Thomason, Roy


Nicholson, Emma (Devon West)
Thompson, Sir Donald (C'er V)


Norris, Steve
Thompson, Patrick (Norwich N)


Onslow, Rt Hon Sir Cranley
Thornton, Sir Malcolm


Oppenheim, Phillip
Thurnham, Peter


Ottaway, Richard
Townend, John (Bridlington)


Page, Richard
Townsend, Cyril D. (Bexl'yh'th)


Paice, James
Tracey, Richard


Patnick, Irvine
Tredinnick, David


Patten, Rt Hon John
Trend, Michael


Pattie, Rt Hon Sir Geoffrey
Trotter, Neville


Pawsey, James
Twinn, Dr Ian


Peacock, Mrs Elizabeth
Vaughan, Sir Gerard


Pickles, Eric
Viggers, Peter


Porter, Barry (Wirral S)
Waldegrave, Rt Hon William


Porter, David (Waveney)
Walden, George


Portillo, Rt Hon Michael
Walker, Bill (N Tayside)


Powell, William (Corby)
Waller, Gary


Rathbone, Tim
Ward, John


Redwood, Rt Hon John
Wardle, Charles(Bexhill)


Renton, Rt Hon Tim
Waterson, Nigel


Richards, Rod
Watts, John


Riddick, Graham
Wells, Bowen


Rifkind, Rt Hon. Malcolm
Whitney, Ray


Robathan, Andrew
Whittingdale, John


Roberts, Rt Hon Sir Wyn
Wiggin, Sir Jerry


Robertson, Raymond (Ab'd'n S)
Wilkinson, John


Robinson, Mark (Somerton)
Willetts, David


Roe, Mrs Marion (Broxbourne)
Wilshire, David


Rowe, Andrew (Mid Kent)
Winterton, Mrs Ann(Congleton)


Rumbold, Rt Hon Dame Angela
Winterton, Nicholas (Macc'f'ld)


Ryder, Rt Hon Richard
Wolfson, Mark


Sackville, Tom
Wood, Timothy


Scott, Rt Hon Nicholas
Yeo, Tim


Shaw, David (Dover)
Young, Rt Hon Sir George


Shaw, Sir Giles (Pudsey)



Shepherd, Colin (Hereford)
Tellers for the Ayes:


Shersby, Michael
Mr. Timothy Kikhope and


Sims, Roger
Mr. Andrew McKay.




NOES


Abbott, Ms Diane
Bayley, Hugh


Adams, Mrs Irene
Beckett, Rt Hon Margaret


Ainger, Nick
Beith, Rt Hon A.J.


Ainsworth, Robert (Cov'try NE)
Bell, Stuart


Allen, Graham
Benn, Rt Hon Tony


Anderson, Donald (Swansea E)
Bennett, Andrew F.


Anderson, Ms Janet (Ros'dale)
Benton, Joe


Armstrong, Hilary
Bermingham, Gerald


Ashton, Joe
Berry, Dr. Roger


Austin-Walker, John
Betts, Clive


Banks, Tony (Newham NW)
Blair, Tony


Barnes, Harry
Blunkett, David


Barron, Kevin
Boateng, Paul


Battle, John
Boyes, Roland





Bradley, Keith
Hanson, David


Bray, Dr Jeremy
Hardy, Peter


Brown, Gordon (Dunfermline E)
Harman, Ms Harriet


Brown, N. (N'c'tle upon Tyne E)
Hattersley, Rt Hon Roy


Bruce, Malcolm (Gordon)
Henderson, Doug


Burden, Richard
Heppell, John


Byers, Stephen
Hill, Keith(Streatham)


Caborn, Richard
Hinchliffe, David


Callaghan, Jim
Hoey, Kate


Campbell, Mrs Anne (C'bridge)
Hogg, Norman(Cumbernauld)


Campbell, Menzies (Fife NE)
Home Robertson, John


Campbell, Ronnie (Blyth V)
Hood, Jimmy


Canavan, Dennis
Hoon, Geoffrey


Cann, Jamie
Howarth, George(Knowsley N)


Chisholm, Malcolm
Howells, Dr. Kim (Pontypridd)


Clapham, Michael
Hoyle, Doug


Clark, Dr David (South Shields)
Hughes, Kevin (Doncaster N)


Clarke, Eric (Midlothian)
Hughes, Robert(Aberdeen N)


Clarke, Tom (Monklands W)
Hughes, Roy (Newport E)


Clelland, David
Hughes, Simon(Southwark)


Clwyd, Mrs Ann
Hutton, John


Coffey, Ann
Illsley, Eric


Cohen, Harry
Ingram, Adam


Connarty, Michael
Jackson, Glenda(H'stead)


Cook, Frank (Stockton N)
Jackson, Helen(Shef'ld, H)


Cook, Robin (Livingston)
Jamieson, David


Corbett, Robin
Janner, Greville


Corbyn, Jeremy
Johnston, Sir Russell


Corston, Ms Jean
Jones, Barry(Alyn and D'side)


Cousins, Jim
Jones, Jon Owen(Cardiff C)


Cox, Tom
Jones, Lynne(B'ham S O)


Cryer, Bob
Jones, Martyn (Clwyd,SW)


Cummings, John
Jowell, Tessa


Cunliffe, Lawrence
Keen, Alan


Cunningham, Jim (Covy SE)
Kennedy, Jane (Lpool Brdgn)


Cunningham, Rt Hon Dr John
Khabra, Piara S.


Darling, Alistair
Kilfoyle, Peter


Davidson, Ian
Kirkwood, Archy


Davies, Bryan (Oldham C'tral)
Lestor, Joan (Eccles)


Davies, Rt Hon Denzil (Llanelli)
Lewis, Terry


Davies, Ron (Caerphilly)
Litherland, Robert


Davis, Terry (B'ham, H'dge H'l)
Livingstone, Ken


Denham, John
Lloyd, Tony (Stretford)


Dewar, Donald
Llwyd, Elfyn


Dixon, Don
Loyden, Eddie


Dobson, Frank
Lynne, Ms Liz


Donohoe, Brian H.
McAllion, John


Dowd, Jim
McAvoy, Thomas


Dunnachie, Jimmy
Macdonald, Calum


Dunwoody, Mrs Gwyneth
McFall, John


Eagle, Ms Angela
McKelvey, William


Eastham, Ken
Mackinlay, Andrew


Enright, Derek
McLeish, Henry


Etherington, Bill
McMaster, Gordon


Evans, John (St Helens N)
McNamara, Kevin


Fatchett, Derek
McWilliam, John


Faulds, Andrew
Madden, Max


Field, Frank (Birkenhead)
Maddock, Mrs Diana


Fisher, Mark
Mahon, Alice


Flynn, Paul
Mandelson, Peter


Foster, Rt Hon Derek
Marshall, David (Shettleston)


Foulkes, George
Marshall, Jim (Leicester, S)


Fraser, John
Martlew, Eric


Fyfe, Maria
Maxton, John


Gapes, Mike
Meacher, Michael


Garrett, John
Michie, Bill(Sheffield Heeley)


George, Bruce
Michie, Mrs Ray (Argyll Bute)


Gerrard, Neil
Milburn, Alan


Gilbert, Rt Hon Dr John
Miller, Andrew


Godman, Dr Norman A.
Moonie, Dr Lewis


Golding, Mrs Llin
Morgan, Rhodri


Gould, Bryan
Morris, Rt Hon A.(Wy'nshawe)


Graham, Thomas
Morris, Estelle (B'ham Yardley)


Grant, Bernie (Tottenham)
Morris, Rt Hon J.(Aberavon)


Griffiths, Nigel (Edinburgh S)
Mowlam, Marjorie


Griffiths, Win (Bridgend)
Mudie, George


Grocott, Bruce
Mullin, Chris


Gunnell, John
Murphy, Paul


Hain, Peter
Oakes, Rt Hon Gordon


Hall, Mike
O'Brien, Michael (N W'kshire)






O'Hara, Edward
Smith, Rt Hon John (M'kl'ds E)


Olner, William
Smith, Llew (Blaenau Gwent)


O'Neill, Martin
Snape, Peter


Orme, Rt Hon Stanley
Soley, Clive


Parry, Robert
Spearing, Nigel


Patchett, Terry
Squire, Rachel (Dunfermline W)


Pendry, Tom
Steinberg, Gerry


Pickthall, Colin
Stevenson, George


Pike, Peter L.
Stott, Roger


Pope, Greg
Straw, Jack


Powell, Ray (Ogmore)
Taylor, Mrs Ann (Dewsbury)


Prentice, Ms Bridget (Lew'm E)
Thompson, Jack (Wansbeck)


Prentice, Gordon (Pendle)
Tipping, Paddy


Prescott, John
Turner, Dennis


Primarolo, Dawn
Tyler, Paul


Purchase, Ken
Walker, Rt Hon Sir Harold


Quin, Ms Joyce
Wallace, James


Radice, Giles
Walley, Joan


Randall, Stuart
Wardell, Gareth (Gower)


Raynsford, Nick
Wareing, Robert N


Reid, Dr John
Watson, Mike


Rendel, David
Welsh, Andrew


Robertson, George (Hamilton)
Wicks, Malcolm


Robinson, Geoffrey (Co'try NW)
Wigley, Dafydd


Roche, Mrs. Barbara
Williams, Rt Hon Alan (Sw'n W)


Rogers, Allan
Williams, Alan W (Carmarthen)


Rooney, Terry
Wilson, Brian


Ross, Ernie (Dundee W)
Winnick, David


Rowlands, Ted
Wise, Audrey


Ruddock, Joan
Worthington, Tony


Salmond, Alex
Wray, Jimmy


Sedgemore, Brian
Wright, Dr Tony


Sheldon, Rt Hon Robert
Young, David (Bolton SE)


Short, Clare



Simpson, Alan
Tellers for the Noes:


Skinner, Dennis
Mr. Alan Meale and


Smith, Andrew (Oxford E)
Mr. John Spellar.


Smith, C. (Isl'ton S & F'sbury)

Question accordingly agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House, pursuant to the Order 114 December].

[Mr. Geoffrey Lofthouse in the Chair.]

Clause 1

INCREASE IN PRIMARY CLASS 1 CONTRIBUTIONS

Question proposed, That the clause stand part of the Bill.

Mr. Adam Ingram: It is most unusual to commence the Committee stage of such an important Bill just 15 minutes after it has received its Second Reading. Usually hon. Members are allowed a reasonable number of days to examine and reflect on what the Minister said on Second Reading and to consider the other speeches, although, given some of the contributions from the Government Benches during today's debate, little reflection would be necessary. That opportunity has been denied us tonight, as it was last night in the same way during our proceedings on the Statutory Sick Pay Bill.
Usually, having considered the debate, there is an opportunity to consider the clauses in great detail and to submit suitable amendments. Sadly, that is not to be because the Government are forcing the Bill through for reasons which were dealt with in detail during the debate on the guillotine motion. I am sure that if I started to go through all those arguments again, Mr. Lofthouse, you would rule me out of order, so I have no intention so to do.
Because of the procedure imposed by the Government, and to ensure that we continue the debate constructively

and build on the many important points raised by the Opposition, we have chosen to have a clause stand part debate immediately. Many crucial matters at the heart of Government taxation policy were raised on Second Reading. As they were not adequately dealt with in the Government responses—certain specific questions were asked, but not answered—this debate gives us a further opportunity to probe those issues and concerns.
On the surface, clause 1 appears to be fairly innocuous. Anyone who is not versed in the obscure terminology used in drafting Bills could be led to think that the clause does not amount to much. To put the matter in context and so that we can better grasp its content, it is worth reading the clause. Subsection (1) states:
In section 8 of the Social Security Contributions and Benefits Act 1992 (calculation of primary Class 1 contributions), in subsection (2)(b) (by virtue of which the main primary percentage is 9 per cent.) for '9 per cent.' substitute '10 per cent.'.
Subsection (2) is easier to understand:
The above amendment comes into effect on 6 April 1994.
I thought long and hard about how the clause had come about. I knew what it meant after I had worked my way through the verbiage, but I could not quite work out how a Government who go on and on about being a tax-cutting Government could introduce a Bill, the main clause of which imposes a massive tax increase on the British people. I found that difficult to comprehend. I pondered the matter and I anticipated the possible reason. Then, suddenly, it came to me like a flash of divine inspiration.
I visualised the Cabinet meeting when all that took place. There they were, sitting round the Cabinet table, each and every one of them a senior Minister of State. The Chancellor was telling them that the Government—riot exactly this Government and not exactly under this Chancellor—had made a terrible mess of the economy during the past 14 years, so something drastic needed to be done. He called for them to speak up if they had any ideas about how to get the Government out of the hole in which they found themselves.
Up popped the Secretary of State for Social Security —he might even pop up tonight. He said, "Please, Sir, please, Sir. I have an idea. I know what we should do. I have a little list. We should punish the sick, the disabled and the poor and impose new taxes on the working people of Britain. They should pay for the Government's mistakes. Why don't we increase national insurance contributions?"
That is exactly what the Government did and that is why we have the Bill. The clause, stripped of its legal verbiage, increases employees' national insurance contributions from 9 per cent. to 10 per cent.—coupled with the national insurance contribution increases on the self-employed—and will take an extra £2·26 billion out of the pockets of those workers. That is £360 million more in taxes than if the Government had put 1p on the basic rate of income tax.
As we would expect from the Government, that increase is designed to hit those on low wages harder than those on top salaries. National insurance contributions apply more to those lower down the pay scale than income tax does. That means that half a million workers too poor to pay income tax will nevertheless pay national insurance contributions. As my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) pointed out on Second Reading, the poor pay more with national insurance increases.
Examples of the effect of the increase have already been given, but it is worth doing so again during this clause stand part debate. The 1 per cent. rise in national insurance contributions will mean that a shop assistant earning £6,000 a year will pay an extra 38p a week in contributions, whereas a 1p rise in the basic rate of tax would cost nothing.
The rise in national insurance contributions will also hit those on middle incomes more than the very rich. A company secretary earning £430 a week—just over £22,000 a year—will pay £3·75 extra in national insurance contributions, which is nearly 1 per cent. of his wage. However, a senior executive earning £220,000 a year will pay exactly the same—£3·75 a week—in extra national insurance contributions, which is less than 0·1 per cent. of his salary. All that is against the assurances given by the Prime Minister when he told the House on 28 January 1992 that he had
no plans to raise … the level of national insurance contributions."—[Official Report, 28 January 1992; Vol. 202, c. 808.]
I wonder why the Prime Minister was not prepared to be more honest with the House and the country on that issue.
While the Prime Minister was trying to conceal the truth, his Chancellor has been much more honest. A headline in the Daily Mail today says, "Clarke Comes Clean". That, as my hon. Friends have pointed out, is an admission by the Chancellor that the 1 per cent. increase in national insurance contributions is part of the biggest tax hike in our history. It is an admission that what is laid down in clause 1 is part of the—there is a debate about whether it is £9 or £10 so, for argument's sake, I shall say £9—increase in taxes that the average family will have to pay next year and part of the £16 a week increase in taxes the year after.
The Chancellor may have come clean with the Treasury and Civil Service Select Committee yesterday, but we now know that he is playing dirty with the British people. As my hon. Friends have pointed out during the debate, higher national insurance contributions are characteristic of this pay-more-get-less Tory Government.
This is not the first increase in contributions that the Government have introduced. The standard rate was increased from 6·5 per cent. to 9 per cent. in the 1980s. What is most striking and most cynical is that those rises were never accompanied by an improvement in the level of national insurance benefits. The recently announced reductions in unemployment benefit are only the latest and most blatant example of that more-for-less policy. Merging unemployment benefit with income support to produce the job seeker's benefit is a cynical ploy wrapped up in a semantic change.
Cutting the contributory element from 12 to six months will remove 90,000 people from entitlement to any benefit after six months—50,000 men and 40,000 women. Cutting benefits to raise money is the traditional approach of a Tory Government who have created their own fiscal crisis. Beyond that obvious short-termism is a more damaging policy—the destruction of the contributory principle to the national insurance fund. All that is relevant to clause 1.
My hon. Friend the Member for Garscadden earlier demanded that the Secretary of State should tell us whether there is to be a new reduced rate of benefit for unemployed people under 25. I am sure that those young people would

like to know. That question was repeated by my hon. Friend the Member for Manchester, Withington (Mr. Bradley), but no answer was given.
Unemployment benefit is paid on a non-means-tested basis because that is how people expect the system to work. They pay into the national insurance fund on the understanding that doing so entitles them to benefits, irrespective of other factors such as age. What matters, or used to matter, is the number of contributions made. That is the basis of a contractual relationship, and it is the basis on which the fund was established.
In the past, people could expect that paying national insurance contributions would provide for their security in their old age. We know exactly what the Secretary of State and the Chief Secretary to the Treasury now think of that principle. What an insulting message has gone out to the British people. On the other hand, they have been told that they must contribute more to the national insurance fund, but on the other, they have been told that they must make their own pension provision because what they will get from the fund will be nugatory. That is what the Chief Secretary has said about future pension provision, following his famous put-down of the "No, not now, not ever" Secretary of State for Social Security.
The Government have a clear agenda of increasing taxes and reducing benefit. That means reducing unemployment benefit, invalidity benefit and pension entitlement. Research estimates have shown that, if the current approach to pensions uprating had been in place since 1948, today's £56·10 single pension would be worth only £23 a week. I am sure that everyone will agree that no one could live on that. We have heard such a payment described as not worth a bag of nuts. Perhaps that should be rephrased and the payment described as being worth only a bag of nugatories.
The long march through benefit levels has been accompanied by a systematic programme of making them harder to obtain and the link between contributions and entitlement has been consistently eroded. Receiving partial benefits for partial contributions is almost a thing of the past. The qualification for short-term benefits has been made more difficult while at the same time regulations have increased to cut off the jobless from benefit.
The Government's approach to the management and financing of the national insurance fund shows a clear contempt for the contributory principle and for the needs of the British people for security against illness, poverty and unemployment and in old age. The national insurance system operates on the basis of the trust and consent of contributors. Clause 1 and the benefit changes that accompany it in the two Budgets this year are an affront to that trust and consent.
The previous Chancellor of the Exchequer spoke of the urgent need to address the deficit in the fund. He said:
when a deficit of this size emerges in the fund, it is natural to
look to all contributors to make up the balance."—[Official Report, 16 March 1993; Vol. 221, c. 179.]
Last night, we debated the scandalous proposals to cut statutory sick pay. During that debate it became clear that reductions in employers' national insurance contributions were used as a bribe to persuade companies to take their new sick pay obligations lying down.
In their zeal to cut benefit expenditure, the Secretary of State for Social Security and the Chancellor have made it impossible to ask all contributors to make up the deficit.


Consequently, the burden of propping up the depleted national insurance fund is being placed on employees on middle and low incomes.
This debate will allow the Minister to deal with the many issues raised on Second Reading. I am sure that my hon. Friends who contribute to it will pose further questions for him to answer. In the light of the debate that surrounded the Budget, does the Minister think that such a massive tax rise as the one prescribed by the increase in national insurance contributions is justified? Will he let us into a little secret and tell us what alternatives to the national insurance scheme were considered and then rejected by the Cabinet, or must we wait until the next unified Budget before we learn of the next increase in contributions and cuts in benefit?
On Second Reading, reference was also made to the half a million people who are too poor to pay income tax, but will be expected to pay national insurance contributions. I have said the same during consideration of this clause. Will the Minister confirm that figure, or does he have a different figure to give the House?
Other questions were raised by my hon. Friends the Members for Garscadden and for Manchester, Withington (Mr. Bradley). Will the Secretary of State confirm whether additional payments for adult dependants will remain, once the contributory job seeker's allowance has been introduced? Will he clarify that the basic rate of job seeker's allowance for those under 25 years of age on income support will not mean a reduced rate of benefit for all unemployed people aged 25? Those questions were asked twice on Second Reading. I appreciate that we are only 15 minutes away from that debate, but I should have thought that the Minister had had time to reflect on them. If his colleague could not answer in his summing up on Second Reading, perhaps we can have the answers in relation to this clause.

Ms Ann Coffey: I wish to discuss the proposed cuts in invalidity benefit, which is funded out of national insurance contributions. Since early this year, rumours of cuts in that benefit have created fear and uncertainty. I am worried that that fear and uncertainty for people currently receiving invalidity benefit will continue because they will be subject to stricter reviews if they are to continue receiving benefit. Many people who receive that benefit face having it removed.
The Government's rationale for that is the growth in the number of people receiving invalidity benefit. Indeed, that is their rationale for cutting all benefits—apparently, too many people receiving benefit cost too much. The Budget debate touched on some of the economic reasons why the Government seem unable to discharge their responsibilities as guardians of the welfare state. However, that is not the responsibility of the sick, who seem to have become the Government's new scapegoats, adding to a long list that includes trendy teachers, politically correct social workers, spendthrift councils, soft doctors, and women, particularly single mothers.
The Independent Policy Studies report shows that 29 per cent. of the growth in invalidity benefit has occurred because people are staying on invalidity benefit rather than taking retirement pension; 16 per cent. has occurred because more women are paying national insurance contributions, which makes them eligible for invalidity benefit; 13 per cent. is due to demographic reasons, in that there are more disabled people; and 42 per cent. is because

of a genuine growth in the number of people claiming invalidity benefit among a stable population of disabled people. That is to do partly with new claimants and partly with the fact that people are staying on invalidity benefit longer.
The Government have deduced that, because of the increase in invalidity claimants at a time when the nation's health is supposed to have improved, the increase must relate to the fact that people are not really sick. Health statistics clearly show that ill health and disability are increasing in areas of poor income. I am worried that those people will be penalised by the new rules for eligibility.
The Government say that the problem is that GPs are too soft and take undue account of their patients' needs. They will not act effectively to control access to invalidity benefit. I suspect that that is a gross generalisation, as some doctors do assist claimants by providing ample information, and some do not. The Government also say that the benefit is used as an early retirement benefit and point to the number of men over the age of 50 receiving invalidity benefit, which was a deliberate Government policy to encourage people to take invalidity benefit to remove them from the unemployment register.
That is where the Government are acting extremely immorally. Some people who have taken early retirement receive invalidity benefit and face the possibility of the benefit being removed following a review. They considered that they had entered a contract, part of which was that they were retiring through ill health. Having retired early, they will now find that that benefit will not continue.
To establish an objective criteria, there is a clear cut-off point. It is difficult to be objective about people's illness because it depends on people's skills and the availability of jobs. It is worrying that certain categories of people who clearly cannot work—for instance, people with mental illness or ME—

Mr. George Howarth: My hon. Friend rightly spoke of the Government's contract with people who have retired in terms of what benefits they will receive. Does she agree that part of their contract is national insurance contributions? People believe that they will be eligible for benefit after retirement, in whatever circumstances. Is not that an important part of that argument?

Ms Coffey: I totally agree with my hon. Friend, who makes a valid point. Many people will be angry that the Government have reneged on their contracts and put them in difficult personal circumstances. We shall probably see a rerun of the complaints from the public, similar to those about the implementation of the Child Support Act 1991, the effect of which is a consequence of the criteria that were not transparent at the time—

The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse): Order. I hesitate to intervene, but the hon. Lady is going rather wide of the clause. The debate is about contributions, not benefits.

Ms Coffey: I apologise, Mr. Lofthouse. I got carried away by a sudden insight into the comparison with the implementation of the Child Support Act.
Will the same hard criteria apply to the review of those currently receiving invalidity benefit as to new claimants?


The Minister is creating a new class of people that will consist of those who are not fit enough to work, and their position will be exacerbated by employers' obligations to fund sick pay. Yet those people will be unable to receive invalidity benefit. They will be rejected by employers and by the benefit system at a time when employers have choice because of the level of unemployment. Employers are not happy to employ people with any kind of sickness record. That is a serious problem.
The problem with such a cut in benefit is that it affects dramatically individual families' financial arrangements, about which it is difficult to make gross generalisations. As a reaction to that, we shall see a lot of anger and frustration and many people will feel let down because they have paid national insurance contributions all their lives and regard it as an insurance to protect them against the consequences of illness. Clearly, the Government are reneging on their contract with those people and people will feel betrayed.

Mr. Nicholas Scott: As the Committee will be aware, clause 1 is the principal clause in the Bill. As the Opposition spokesman acknowledged towards the end of Second Reading, this is essentially a one-clause Bill. Inevitably, therefore, the debate has added several questions to those raised, and in the main answered by my hon. Friend the Under-Secretary, on Second Reading.
The effect of the clause is to increase by 1 per cent. the rate of contributions made by employees who pay the main rate for the benefit.
The hon. Member for East Kilbride (Mr. Ingram) made several points about those who will be affected by the proposals. He asked for confirmation of the number of people whom he described as too poor to pay income tax but still liable to pay higher national insurance contributions.
Any employee whose earnings are below the tax threshold but who is still liable to pay NI contributions will earn entitlement to a whole range of contributory benefits in return for a relatively small contribution. It thus remains an extremely good deal for people affected in this way. Someone earning £65 a week will be entitled to a range of NI contributory benefits for between £1 and £2 a week. That represents good value for the people concerned.
My hon. Friend the Member for Richmond, Yorks (Mr. Hague) has asked me to apologise to hon. Members for not answering all their points in detail, because the guillotine came down. I understand the concern of those who have discussed the job seeker's allowance. Detailed questions of our policy for this benefit will be open to full debate at the time, but it would be only right to give hon. Members some idea of the answers that are likely to be delivered then.
We are concerned to ensure by means of the Bill that the national insurance fund can, for the immediate future, meet its expenditure commitments. None of the announced changes for the future will affect the fund for 1994–95, the year with which we are concerned today.
We were asked whether the job seeker's allowance would be uprated by reference to the retail prices index or to Rossi. The answer is Rossi. We were also asked whether the income support pattern—a lower rate of personal allowance for those under the age of 25—would be reflected in provision for the job seeker's allowance. I can confirm that on present plans it will be reflected in the new

allowance. That is only right, since it reflects the lower earnings expectations of people under 25 and the fact that the vast majority of them do not live independently.

Mr. Dewar: I wish to challenge the Minister, although I recognise that he does not want to be involved in a full-scale debate on this—there will be time for that later. He really should face up to the problem, however. He knows that the income support differential which is apparently to be imported to the new job seeker's allowance is in itself controversial and has given rise to a good deal of bitterness. The Minister and I have personal experience of talking to people under 25 who have said that in some ways their living expenses are higher. There is no reason to suppose that a 24-year-old can live more cheaply than a 26-year-old. There is an arbitrary divide, which is reflected in a substantial differential in benefit. It will cause many people anger and distress to discover that the concept is being imported to the new job seeker's allowance—allegedly as an improvement.

Mr. Scott: I have certainly taken part in some vigorous debates, inside and outside the House, about the under-25 rate. Wherever one draws the line, it is bound to attract an element of controversy. The underlying principle—that younger people have lower earnings expectations than older people, and are generally less likely to be living independently—is correctly reflected in the provision that we make through the social security system to meet their need. It is therefore right that the principle used in income support should be reflected in the arrangements that we make for the job seeker's allowance.

Mr. Dewar: It is fundamentally misconceived to defend the idea in terms of lower expectations of earnings. The real test is living expenses. There is no reason to suppose that they are lower at 24 than at 25. That is the wrong starting point. Understandably, having started from the wrong place, the right hon. Gentleman has ended in the wrong place.

Mr. Scott: Within the social security system there is always a need to look at patterns of expenditure, and we take them into account as we make our judgments about levels of benefit.
There is another important aspect to the system as well —providing, to the greatest extent possible, incentives for people to get back into employment. If expectations of earnings are lower for one group than for an older group, yet the benefits paid tend to close the gap and thus reduce the incentive to get back into work, that is a negative aspect of the pattern of provision.

Mr. Terry Rooney: Will the Minister cast his mind back to the time when the contributions rate was much lower and when there was an earnings-related element in unemployment benefit? Surely it is much fairer to have a standard flat rate entitlement, and different earnings expectations can be reflected in the additional premium incorporated as an earnings-related element.

Mr. Scott: We could argue this matter at great length and no doubt will do so when the new allowance is introduced. There will be ample opportunity then to conduct the discussion in the House. Whether I will still be


a Social Security Minister then is a matter for debate, but if experience is anything to go by, I look forward to taking part in the discussions.
It is worth drawing attention to another aspect of the job seeker's allowance—what is known as the hours-allowed-for-partners rule. At the moment, the partner of someone in receipt of benefit may work for 16 hours a week without that being taken into account for purposes of entitlement to benefit. As the House knows, we plan to increase that, from 16 to 24 hours, for the job seeker's allowance.

Mr. Dewar: Our other query was about the dependant's allowance. The Minister is being very helpful so far.

Mr. Scott: A couple's allowance is planned, but not a dependent's allowance, in the sense to which the hon. Gentleman refers.
I should like to answer the points made by the hon. Member for Stockport (Ms Coffey). These matters will be subject to acute parliamentary scrutiny, I have no doubt, when we introduce the incapacity benefit, and the House will turn its mind to the subject when we return from our well-earned Christmas break. I do not want to go into that in detail, except to say that it is right that we should seek to return to a provision for incapacity for work due to disablement or sickness to the principle for which that was first established: that one must be incapable of work if one is to receive compensation. There are other benefits, through unemployment benefit and eventually through the job seeker's allowance, for those who are capable of work but who are unable to get work. Where incapacity manifestly is due to a medical condition, a separate benefit should be available.
It is common ground that entry to the benefit has been too slackly controlled in recent years and that that has led to a considerable increase in the case load for the present benefit at a time when the nation has never been healthier. There has been too little control also over the length of time which people have been able to stay on the benefit without a regular check that they are still entitled to it. As we design the new benefit, we will be at pains to see that those two factors, as well as several others, are taken into account to restore the underlying principle. That principle was the original intention of invalidity benefit and it will apply to the new incapacity benefit.

9. pm

Mr. Dewar: As people who read these debates usually do so with a malicious intent, I had better challenge the statement that there is "common ground" about the entry to invalidity benefit. The Minister will be familiar with the statistic that 53 per cent. of those who are refused invalidity benefit and who go to appeal succeed. That suggests that the benefit is nothing like the soft touch which Ministers seem to think. I would not want the Minister to get the idea that we concede that ground to him.

Mr. Scott: I may have overstated the degree, but I believe that there is a considerable common ground. In the first place, entry to the benefit is by general practitioners. They do not find the task of being a gatekeeper to invalidity benefit attractive. They are under all sorts of social and other pressures to sign people on, rather than applying a purely objective medical test.
We have looked at the appeals procedures and the rules which have applied and developed for invalidity benefit in recent years. We have seen a range of decisions from

commissioners and others. Those have had the effect that many aspects of the benefit and the entitlement to benefit, other than those of a strictly medical kind, have been increasingly taken into account.

Ms Coffey: Does the Minister accept that it is difficult to establish objective medical criteria unless one is determining unfitness to work in terms of a specific disease? That is clearly illogical and absurd and may produce opinions which are less than objective, because, although someone may be suffering from a serious incapacity, it does not make them unfit for work.
Intermediate factors, such as tiredness, stress and mental health problems, also may create unfitness. People are concerned because invalidity benefit will in effect have a capping level. Will not the objective test, which does not exist, have little to do with the people who get the benefit, and will it not be determined more by the fact that only so much incapacity benefit can be given each year?

Mr. Scott: I look forward to discussing those matters in greater detail in the new year, no doubt with the hon. Lady and with others. We do not want to get into Committee stage on this Bill or even to the detail of Second Reading at the moment, but it is our intention to acknowledge that certain conditions would indeed class people on their entitlement to the new benefit. A certain number of conditions will be applied which manifestly render someone incapable of work. In addition, a number of functional tests will be applied and we are consulting widely the medical profession and organisations of and for disabled people -on those tests.
Some private consultations have taken place and we will soon be taking part in more open consultations. The results of those consultations will be evaluated against a pilot number of real cases to see whether the evaluation and testing process is correct. That will take place in good time for the introduction of the new benefit. At that time, we will have arrived at a system of objective medical criteria which will be acceptable to the medical profession and which will be clearly understood to be fair and reasonable by those applying for the benefit and by the public. If I go on much further on incapacity benefit, I am in danger of anticipating a number of discussions which we will have when we return from our holidays.

Mr. Dewar: This will be my last intervention on this point, although not necessarily my last on other matters. I am curious about the methodology and the hint given by the Minister about tests which will be carried out on a group. That group would be processed under the new regulations to see whether the Department had got it right. I recognise that it is often difficult to pin down the criteria. To use a parallel, there is an endless argument about the failure rate in examinations where there is a preconceived notion of the number of people who should or should not qualify. I recognise that many hon. Members are shaking their heads, but it is important to establish the facts.

Mr. Scott: I agree that it is an important point. When we were asked to provide an estimate of the numbers who would become entitled to benefit against those who would not qualify for the new benefit, certain figures were given because we were asked to give some assessment, but it was only the best guess that we could make.
I assure the House that we have no intention of setting a target or setting the criteria to achieve that target. We


shall set out a clear, objective test which will be acceptable to the medical profession and others and will be perceived as fair throughout the country. Those who pass will get the benefit and those who do not pass will not. If more or fewer people fail, we will have to adapt our expectations.

Mr. Rooney: I am grateful to the Minister for his honesty and openness, although I do not like all the answers that he has given. Can he confirm that the same fiscal effect of a 1 per cent. increase in national insurance contribution rates could have been achieved by raising the upper earnings limit to £30,000 a year?

Mr. Scott: I do not have the answer in front of me. If the hon. Gentleman says that is the case, it may be true. I cannot vouch for his research and I am not sure what validity it has for the argument we are making.
I am still very puzzled about Labour party policy. Labour Members make a great deal about the effect of the upper earnings limit as it exists at the moment, but my understanding was that the shadow Chancellor has resiled from the Opposition's position at the last election regarding moving the upper earnings limit, let alone its abolition, which would be totally inappropriate in the light of current circumstances. I do not need to take that point especially seriously.
I do not want to try the patience of the Committee too much, so I shall draw my remarks to a close. In essence, in clause I we are making the major provisions for the Bill itself.
I remind the Committee that this is the first increase in the major national insurance contribution rates in 11 years. the two-tier structure for employees which we introduced in 1989 has been more progressive than the system that existed under the previous Government.
The lowest-paid pay a low percentage of their earnings and get considerable benefits in return. Many people will still pay less than they would have had to do under Labour's single percentage scheme. It is an improvement and I commend the clause to the House.

Mr. Ingram: The Minister has been helpful and our exchanges have elaborated many points. We drifted on to many different issues. Additional queries that were raised as a consequence of that will be dealt with in subsequent regulations and, possibly, new Bills.
However, in the light of tonight's debate, I have to ask
my hon. Friends to join me in voting against the clause.

Question put, That the clause stand part of the Bill:

The Committee divided: Ayes 286, Noes 211.

Division No. 55]
[9.10 pm


AYES


Ainsworth, Peter (East Surrey)
Bates, Michael


Alexander, Richard
Batiste, Spencer


Alison, Rt Hon Michael (Selby)
Bellingham, Henry


Allason, Rupert (Torbay)
Bendall, Vivian


Amess, David
Beresford, Sir Paul


Ancram, Michael
Biffen, Rt Hon John


Arnold, Jacques (Gravesham)
Blackburn, Dr John G.


Ashby, David
Bonsor, Sir Nicholas


Aspinwall, Jack
Booth, Hartley


Atkinson, David (Bour'mouth E)
Boswell, Tim


Atkinson, Peter (Hexham)
Bottomley, Peter (Eltham)


Baker, Nicholas (Dorset North)
Bottomley, Rt Hon Virginia


Baldry, Tony
Bowden, Andrew


Banks, Matthew (Southport)
Bowis, John


Banks, Robert (Harrogate)
Boyson, Rt Hon Sir Rhodes





Brandreth, Gyles
Griffiths, Peter (Portsmouth, N)


Brazier, Julian
Gummer, Rt Hon John Selwyn


Bright, Graham
Hague, William


Brooke, Rt Hon Peter
Hamilton, Rt Hon Archie (Epsom)


Brown, M. (Brigg & Cl'thorpes)
Hampson, Dr Keith


Browning, Mrs. Angela
Hannam, Sir John


Bruce, Ian (S Dorset)
Hargreaves, Andrew


Budgen, Nicholas
Harris, David


Burns, Simon
Haselhurst, Alan


Burt, Alistair
Hawkins, Nick


Butcher, John
Hawksley, Warren


Butler,Peter
Heald, Oliver


Butterfill, John
Higgins, Rt Hon Sir Terence L.


Carlisle, John (Luton North)
Hill, James (Southampton Test)


Carlisle, Kenneth (Lincoln)
Hogg, Rt Hon Douglas (G'tham)


Carrington, Matthew
Horam, John


Carttiss, Michael
Hordern, Rt Hon Sir Peter


Cash, William
Howarth, Alan (Strat'rd-on-A)


Channon, Rt Hon Paul
Howell, Rt Hon David (G'dford)


Chapman, Sydney
Howell, Sir Ralph (N Norfolk)


Clappison, James
Hunt, Rt Hon David (Wirral W)


Clark, Dr Michael (Rochford)
Hunt, Sir John (Ravensbourne)


Clifton-Brown, Geoffrey
Hunter, Andrew


Coe, Sebastian
Jack, Michael


Colvin, Michael
Jackson, Robert (Wantage)


Congdon, David
Jenkin, Bernard


Conway, Derek
Jessel, Toby


Coombs, Anthony (Wyre For'st)
Johnson Smith, Sir Geoffrey


Coombs, Simon (Swindon)
Jones, Gwilym(Cardiff N)


Cope, Rt Hon Sir John
Jones, Robert B. (W Hertfdshr)


Cormack, Patrick
Jopling, Rt Hon Michael


Couchman, James
Kellett-Bowman, Dame Elaine


Cran, James
Key, Robert


Currie, Mrs Edwina (S D'by'ire)
Kilfedder, Sir James


Curry, David (Skipton & Ripon)
King, Rt Hon Tom


Davies, Quentin (Stamford)
Kirkhope Timothy


Davis, David (Boothferry)
Knapman, Roger


Day, Stephen
Knight, Mrs Angela(Erewash)


Deva, Nirj Joseph
Knight, Greg Derby N)


Devlin, Tim
Knight, Dame Jill (Bir'm E'st'n)


Dicks, Terry
Knox, Sir David


Dorrell, Stephen
Kynoch, George (Kicardine)


Douglas-Hamilton, Lord James
Lait, Mrs Jacqui


Dover, Den
Lang, Rt Hon Ian


Duncan, Alan
Lawrence, Sir Ivan


Duncan-Smith, Iain
Legg, Barry


Dunn, Bob
Leigh, Edward


Durant, Sir Anthony
Lester, Jim (Broxtowe)


Dykes, Hugh
Lidington, David


Eggar, Tim
Lightbown, David


Elletson, Harold
Lilley, Rt Hon Peter


Evans, David(Welwyn Hatfield)
Lloyd, Peter (Fareham)


Evans, Jonathan(Brecon)
Lord, Michael


Evans, Nigel (Ribble Valley)
Luff, Peter


Evans, Roger (Monmouth)
Lyell, Rt Hon Sir Nicholas


Evennett, David
MacGregor, Rt Hon John


Faber, David
MacKay, Andrew


Fabricant, Michael
Maclean, David


Fairbairn, Sir Nicholas
McLoughlin, Patrick


Fenner, Dame Peggy
McNair-Wilson, Sir Patrick


Field, Barry (Isle of Wight)
Madel, David


Fishburn, Dudley
Maitland, Lady Olga


Forman, Nigel
Malone, Gerald


Forsyth, Michael (Stirling)
Mans, Keith


Fox, Dr Liam (Woodspring)
Marland, Paul


Fox, Sir Marcus(Shipley)
Marlow, Tony


Freeman, Rt Hon Roger
Marshall, John(Hendon S)


French, Douglas
Marshall, Sir Michael (Arundel)


Fry, Peter
Martin, David (Portsmouth S)


Gale, Roger
Mates, Michael


Gallie, Phil
Mawhinney, Dr Brain


Gardiner, Sir George
Merchant, Piers


Garnier, Edward
Milligan, Stephen


Gill, Christopher
Mills, Iain


Gillan, Cheryl
Mitchell, Andrew (Gedling)


Goodlad Rt Hon Alastair
Mitchell, Sir David(Hans NW)


Gorman, Mrs Teresa
Moate, Sir Roger


Gorst, John
Monro, Sir Hector


Greenway, Harry (Ealing N)
Montgomery, Sir Fergus


Greenway, John (Ryedale)
Moss, Malcolm






Needham, Richard
Stanley, Rt Hon Sir John


Nelson, Anthony
Stephen, Michael


Neubert, Sir Michael
Stern, Michael


Newton, Rt Hon Tony
Stewart, Allan


Nicholls, Patrick
Streeter, Gary


Nicholson, David (Taunton)
Sumberg, David


Nicholson, Emma (Devon West)
Sweeney, Walter


Norris, Steve
Sykes, John


Onslow, Rt Hon Sir Cranley
Tapsell, Sir Peter


Oppenheim, Phillip
Taylor, John M. (Solihull)


Ottaway, Richard
Taylor, Sir Teddy (Southend, E)


Page, Richard
Temple-Morris, Peter


Paice, James
Thomason, Roy


Patnick, Irvine
Thompson, Sir Donald (C'er V)


Pawsey, James
Thompson, Patrick (Norwich N)


Peacock, Mrs Elizabeth
Thornton, Sir Malcolm


Pickles, Eric
Thurnham, Peter


Porter, Barry (Wirral S)
Townend, John (Bridlington)


Porter, David (Waveney)
Townsend, Cyril D. (Bexl'yh'th)


Portillo, Rt Hon Michael
Tracey, Richard


Powell, William (Corby)
Tredinnick, David


Redwood, Rt Hon John
Trend, Michael


Renton, Rt Hon Tim
Trotter, Neville


Richards, Rod
Twinn, Dr Ian


Riddick, Graham
Vaughan, Sir Gerard


Rifkind, Rt Hon. Malcolm
Viggers, Peter


Robathan, Andrew
Walden, George


Robertson, Raymond (Ab'd'n S)
Walker, Bill (N Tayside)


Robinson, Mark (Somerton)
Waller, Gary


Roe, Mrs Marion (Broxbourne)
Ward, John


Rowe, Andrew (Mid Kent)
Wardle, Charles (Bexhill)


Rumbold, Rt Hon Dame Angela
Waterson, Nigel


Ryder, Rt Hon Richard
Watts, John


Sackville, Tom
Wells, Bowen


Scott, Rt Hon Nicholas
Whitney, Ray


Shaw, David (Dover)
Whittingdale, John


Shaw, Sir Giles (Pudsey)
Wiggin, Sir Jerry


Shepherd, Colin (Hereford)
Wilkinson, John


Sims, Roger
Willetts, David


Skeet, Sir Trevor
Wilshire, David


Smith, Sir Dudley (Warwick)
Winterton, Mrs Ann (Congleton)


Soames, Nicholas
Winterton, Nicholas (Macc'f'ld)


Speed, Sir Keith
Wolfson, Mark


Spencer, Sir Derek
Wood, Timothy


Spicer, Sir James (W Dorset)
Yeo, Tim


Spicer, Michael (S Worcs)
Young, Rt Hon Sir George


Spink, Dr Robert



Spring, Richard
Tellers for the Ayes:


Sproat, Iain
Mr. Robert G. Hughes and


Squire, Robin (Hornchurch)
Mr. James Arbuthnot.




NOES


Abbott, Ms Diane
Campbell, Mrs Anne (C'bridge)


Adams, Mrs Irene
Campbell, Menzies (Fife NE)


Ainger, Nick
Campbell, Ronnie (Blyth V)


Ainsworth, Robert (Cov'try NE)
Canavan, Dennis


Anderson, Ms Janet (Ros'dale)
Cann, Jamie


Armstrong, Hilary
Chisholm, Malcolm


Ashton, Joe
Clapham, Michael


Austin-Walker, John
Clark, Dr David (South Shields)


Banks, Tony (Newham NW)
Clarke, Eric (Midlothian)


Barnes, Harry
Clarke, Tom (Monklands W)


Battle, John
Clwyd, Mrs Ann


Bayley, Hugh
Coffey, Ann


Beith, Rt Hon A. J.
Cohen, Harry


Bell, Stuart
Cook, Frank(Stockton N)


Benn, Rt Hon Tony
Cook, Robin (Livingston)


Bennett, Andrew F.
Corbett, Robin


Benton, Joe
Corbyn, Jeremy


Bermingham, Gerald
Corston, Ms Jean


Berry, Dr. Roger
Cousins, Jim


Betts, Clive
Cox, Tom


Blair, Tony
Cryer, Bob


Boyes, Roland
Cummings, John


Bradley, Keith
Cunliffe, Lawrence


Bruce, Malcolm (Gordon)
Cunningham, Jim (Covy SE)


Burden, Richard
Cunningham, Rt Hon Dr John


Byers, Stephen
Darling, Alistair


Caborn, Richard
Davidson, Ian


Callaghan, Jim
Davies, Bryan (Oldham C'tral)





Davies, Rt Hon Denzil (Llanelli)
Maddock, Mrs Diana


Davis, Terry (B'ham, H'dge H'l)
Mahon, Alice


Denham, John
Marshall, David (Shettleston)


Dewar, Donald
Marshall, Jim (Leicester, S)


Dixon, Don
Maxton, John


Dobson, Frank
Meache, Michael


Donohoe, Brian H.
Meale, Alan


Dunnachie, Jimmy
Michie, Bill (Sheffield Heeley)


Dunwoody, Mrs Gwyneth
Milburn, Alan


Eagle, Ms Angela
Miller, Andrew


Eastham, Ken
Moonie, Dr Lewis


Enright, Derek
Morgan, Rhodri


Evans, John (St Helens N)
Morris, Rt Hon A. (Wy'nshawe)


Fatchett, Derek
Morris, Estelle (B'ham Yardley)


Flynn, Paul
Morris, Rt Hon J. (Aberavon)


Foster, Rt Hon Derek
Mudie, George


Foulkes, George
Mullin, Chris


Fraser, John
Murphy, Paul


Fyfe, Maria
Oakes, Rt Hon Gordon


Gapes, Mike
O'Brein, Michael (N W'kshire)


Garrett, John
O'Hara, Edward


George, Bruce
Olner, William


Gerrard, Neil
Parry, Robert


Godman, Dr Norman A.
Patchett, Terry


Golding, Mrs Llin
Pickthall, Colin


Graham, Thomas
Pike, Peter L.


Grant, Bernie (Tottenham)
Pope, Greg


Gunnell, John
Powell, Ray(Ogmore)


Hain, Peter
Prentice, Ms Bridget (Lew'm E)


Hall, Mike
Prentice, Gordon (Pendle)


Hanson, David
Primarolo, Dawn


Hardy, Peter
Radice, Giles


Heppell, John
Randall, Stuart


Hill, Keith (Streatham)
Raynsford, Nick


Hoey, Kate
Reid, Dr John


Hogg, Norman (Cumbernauld)
Rendel, David


Home Robertson, John
Robertson, George(Hamilton)


Hood, Jimmy
Robinson, Geoffrey,(Co'try NW)


Hoon, Geoffrey
Roche, Mrs. Barbara


Howarth, George (Knowsley N)
Rooney,Terry


Howells, Dr. Kim (Pontypridd)
Ross, Ernie(Dundee W)


Hoyle, Doug
Rowlands, Ted


Hughes, Kevin (Doncaster N)
Ruddock, Joan


Hughes, Robert (Aberdeen N)
Sheldon, Rt Hon Robert


Hughes, Roy (Newport E)
Simpson, Alan


Hutton, John
Skinner, Dennis


Illsley, Eric
Smith, Andrew(Oxford E)


Ingram, Adam
Smith, C. (Isl'ton S & F'sbury)


Jackson, Glenda (H'stead)
Smith, Rt Hon John (M'Kl'ds E)


Jackson, Helen (Shef'ld, H)
Smith, Llew (Blaenau Gwent)


Jamieson, David
Snape, Peter


Johnston, Sir Russell
Soley, Clive


Jones, Barry (Alyn and D'side)
Spearing, Nigel


Jones, Jon Owen (Cardiff C)
Spellar, John


Jones, Lynne (B'ham S O)
Stott, Roger


Jones, Martyn (Clwyd, SW)
Taylor, Mrs Ann (Dewsbury)


Keen, Alan
Taylor, Rt Hon John D. (Strgfd)


Kennedy, Jane (Lpool Brdgn)
Thompson, Jack (Wansbeck)


Khabra, Piara S.
Tyler, Paul


Kinnock, Rt Hon Neil (Islwyn)
Walker, Rt Hon Sir Harold


Kirkwood, Archy
Wallace, James


Leighton, Ron
Walley, Joan


Lestor, Joan (Eccles)
Wardell, Gareth(Gower)


Lewis, Terry
Wareing, Robert N


Litherland, Robert
Watson, Mike


Livingstone, Ken
Welsh, Andrew


Lloyd, Tony (Stretford)
Wicks, Malcolm


Llwyd, Elfyn
Wigley, Dafydd


Loyden, Eddie
Williams, Rt Hon Alan (Sw'n W)


Lynne, Ms Liz
Williams, Alan W (Carmarthen)


McAllion, John
Winnick, David


McAvoy, Thomas
Wise, Audrey


Macdonald, Calum
Wray, Jimmy


McKelvey, William
Wright, Dr Tony


Mackinlay, Andrew
Young, David(Bolton SE)


McLeish, Henry



McMaster, Gordon
Tellers for the Noes:


McNamara, Kevin
Mr. Jim Dowd and


McWilliam, John
Mr. Peter Kilfoyle


Madden, Max

Question accordingly agreed to.

Clause 1 ordered to stand part of the Bill.

Clause 2

NATIONAL HEALTH SERVICE ALLOCATION

Mr. Dewar: I beg to move amendment No. 4, in page 1, line 22, leave out subsection (3).
This matter has been discussed at various times during the past few days. I almost said "a few weeks", because it seemed like that at times. It is worth having another quick look at the matter if only to settle fears and establish fact. After all, that is one of the classic purposes and aims of the Committee.
Perhaps this is a plea in irritation rather than mitigation but I was one of the gallant band of brothers which was here at 3 o'clock this morning, together with the Government Whip. He is wearing an exciting tie but I suspect that he will be feeling slightly jaded if, like me, he survived through the long passage of arms over the Ways and Means resolution.
I appear in a somewhat unlikely but not uncharacteristic guise because I suspect that I am on the Government's side in this matter. [Interruption.] It is a matter of some interest because during my time here—it will be 20 years in about two months—I have been engaged in debate, argument and sometimes a spasm panic over retrospective legislation. There are occasions when those who are debating such subjects do not entirely understand the nature of the beast. I include myself because I have no false modesty about these matters.
Earlier, the Minister referred to the retrospective principle and the impact of clause 2. Of course, subsection (3) concentrates on that aspect. My amendment, which I unashamedly say is a probing amendment, also relates to it.
I am pleased that my hon. Friend the Member for Bradford, South (Mr. Cryer) is here, because if he read in cold blood what I am about to say, he might imagine that it amounted to a criticism of his performance last night. That is not my intention. I think that my hon. Friend's display was spirited. As I moved through the Lobby just before 3 am I heard it described by a senior Conservative as a bravura performance. I have some sympathy with that view.
I am not sure that my hon. Friend's contribution was entirely in touch with the realities of the situation. We were greatly entertained—I hope that my hon. Friend does not object to that term—by the speculations about where that £4·6 billion had disappeared from. It certainly appeared as though a great disappearing act had been performed, because that £4·6 billion had disappeared from the books and was about to be recovered by some form of additional taxation heaped upon today's generation to pay for the mistakes of the past.
At other times in the debate we were led to believe that it was treasure trove, which might still be buried at the back of a filing cabinet at Richmond house. We listened to some splendid arcane arguments about how that money could be distributed for the greater good of humanity, in particular the people of Bradford, South.
I look forward to the rational, tidy explanation from the Parliamentary Under-Secretary of State, because he always displays such characteristics on such small, unimportant

matters. If I were to take a barrack-room lawyer's view of the matter—on occasions I have been unfairly accused of such behaviour—

Mr. Giles Radice: No, never.

Mr. Dewar: Right on cue. Thank you.
It is possible to argue for the purpose of the debate that retrospective legislation concerns a rather more serious issue than that suggested last night. It is not designed just to put right a slip of the draftsman, which provided an unlikely legal basis for the proper conduct of affairs and which was not challenged. Retrospective legislation, of its nature, introduces a legal provision that is intended to relieve someone for acts which were clearly not proper and which might even have been outwith the law or ultra vires the capacity of the person concerned. Perhaps even more worryingly, retrospective legislation may replace money that has been misappropriated, misspent or otherwise wasted.
That did not happen in this case and that is why I think that the amazing and cheerful chase that took place in the small hours of this morning, in which some effective points were raised about the general conduct of the Government's business and their policy on the health service, may have been marginally wide of the mark.
I say that with considerable hesitation and I am aware of the fact that I may give unintentional offence. That should not be so because the debate was a useful exercise. It achieved almost all the aims that my hon. Friends for Bradford, South and for Bolsover (Mr. Skinner), as well as that small group of frondeurs and skirmishers who joined them, had in mind when they set out on the exercise.
My impression—I am sure that the Minister will rise to confirm, deny or explain it—is that there was a unanimity of view about how the formula governing the money which is collected in the national insurance contributions kitty should have operated. That formula resulted in an annual allocation to the national health service.
I know that I should have the relevant figures in the back of my mind. I feel guilty about setting out on the debate without having done the necessary in-depth research. If I remember rightly, only about 14 per cent. of NHS expenditure comes from the national insurance fund, the rest comes from general taxation. It is rather like the poll tax, if you will allow me one sentence on it, Mr. Lofthouse, and the figures that expressed it as a percentage of total local government expenditure. It was always a remarkably small percentage, at between 11 and 12 per cent., because the rest of the money, certainly in England, was provided through, I believe, the standard spending assessment. We have a different system north of the border and my hesitation about that term is due to the fact that I am a little rusty on the exact terminology.
9.30 pm
As I understand it, the 14 per cent. over the years has been properly allocated. I use the words in a lay sense, as everyone thought that it should have been allocated and no one would have thought that anything untoward would have happened if it had not been found out in some recess of Richmond house by some fiendishly ingenious draftsman. Perhaps it was the personal work of the Minister. Perhaps he will tell us? Perhaps, as the new broom at Richmond house, who has his own form of careful craftsmanship, he came across the fault. The Minister can explain that.
Anyway, someone found that ambiguity, as the Minister of State referred to it, which may at some future date have allowed someone of a malevolent disposition to challenge the propriety of the legal basis on which the acceptably proper allocation took place. The Minister was only making clear that that ambiguity cannot be traded on at some future date and cannot cause upset or disorder in the affairs of the national health service. That is not retrospective in the full sense of the word or retrospective in the sense in which we would normally want to look, to use a fine Scottish word, sidyways at the provision.
Therefore, tentatively at this stage, I am not mindful to force the matter to a Division or to unnecessarily prolong the debate, but I am prepared to listen to other hon. Members speak on the matter. My hon. Friend the Member for Bradford, South may want to argue the toss.

Mr. Cryer: I am looking forward to what the Minister will say, because, although he was subjected to a number of extensive questions last night, the Government Whip intervened and prevented the Minister from replying.

Mr. Dewar: I am sorry to hear that. My hon. Friend is absolutely right. At that stage, my hon. Friend the Member for Bolsover (Mr. Skinner) was just warming up nicely and in his 56th minute and, in my untutored view—I do not want to challenge the Chair—he was in order for at least 90 seconds of that time. Under those circumstances, someone was thoughtless and unkind enough to move a closure motion and we heard no more. However, that deprived us of the scholarly and textual analysis of the clause that I am sure that the Minister would have provided.
My hon. Friend the Member for Bradford, South is, on occasions, a much misunderstood man. He is showing typical common sense in saying that he should not rush in to pick a fight or to argue the toss on that matter until he has heard the official explanation. I am sure that I have interpreted it correctly and that my hon. Friend's stance implies that if he is not satisfied with the Minister's reply, he can return to the issue with renewed force and authority, having inspected the wares that the Minister is about to lay before the Committee. It is common sense and my hon. Friend's attitude is admirable. It would ill become me to stand between the Committee and what the Minister has to say because, if the Minister's comments are useful to my hon. Friend, almost certainly, they will be useful to me.
On that basis of friendliness and the kind of constructive spirit in which Committees of the whole House ought to be conducted, I look forward to hearing what the Minister has to say.

Mr. Hague: I am delighted to have an opportunity to respond to the points made by the hon. Members for Glasgow, Garscadden (Mr. Dewar) and for Bradford, South (Mr. Cryer), and by their colleagues during the unfinished debate on the Ways and Means motion last night. Much alarm was expressed about the matter in our earlier debate. The hypothesis advanced by the hon. Member for Garscadden about what has happened was much nearer to the truth than was some of the alarm expressed last night.
I stress at the outset that no money has been borrowed and that nobody has been ripped off, as was suggested last night. No money has been lost, and no money has been spent that has not been accounted for properly. No money has been spent in any way other than the way in which

Parliament intended it to be spent. No money has been misplaced. There is no scandal of the kind about which some hon. Members wondered.
In answer to one of the first questions asked by the hon. Member for Bradford, South last night, there is no retrospective charge on anyone who pays into the national insurance fund. The provision has no implications for the payments that people have made or will make. It makes no difference to any individual; it is simply a matter of ensuring that the legal cover for payments made out of the national insurance fund to the national health service is correct and in order for the future and for the past few years.
Clause 2 deals with the ambiguity, as my right hon. Friend the Minister for Social Security and Disabled People accurately described it, that has been uncovered in the amending provisions of the Social Security Act 1989 concerning the allocation paid out of national insurance contributions to the national health service. As the Committee knows, the allocation to the national health service is a long-standing provision. The hon. Member for Garscadden was approximately correct in his thoughts about the percentage of national health service funding that is paid for through this route.
Many people traditionally associate treatment under the health service with having paid contributions, even though treatment is in no way dependent on a contribution condition. The 1989 Act altered the structure of national insurance contributions for employees, which is what led to the mistake in the first place. The Act introduced for the first time the concept of an initial percentage and a main percentage. The former would apply to earnings up to the lower earnings limit, and the latter to earnings above that level. I think that I am carrying the Committee with me so far.
Before the 1989 Act, there was a single percentage of 5 per cent., 7 per cent. or 9 per cent. applicable to each level of earnings, and the NHS allocation was a set proportion of that percentage. However, with the 1989 Act, the initial percentage became just 2 per cent.
It was generally agreed in the House and elsewhere that, because the figure was so low, the national health service allocation should apply only to the higher range of earnings on which contributions were paid—that is, between the lower earnings limit and the upper earnings limit— [Interruption.] There is a bit of disruption by my colleagues from the Whips Office. Typically, that rate was 9 per cent.
I am sure that we can all see what the logic was at the time, and I am sure that we continue to agree with it. Given that the allocation to the national health service was 1·05 per cent.—more than half the value of the 2 per cent. initial rate—there was little point in dividing the 2 per cent. in that way. It was believed that contributions to the national health service would instead come out of the payments between the lower earnings limit and the upper earnings limit.
The amendment to the previous legislation by the 1989 Act sought to achieve that intention, but it did so by distinguishing the contributions on which the allocation was payable by referring to them as contributions paid at the main primary percentage rate.
I am sorry to disappoint the hon. Member for Garscadden. It was a diligent official, rather than the new ministerial broom at Richmond house, who first recognised that, because the statutory definition of the main primary


percentage rate was in terms of contributions payable at 9 per cent.—10 per cent. from next April as a consequence of the Bill—it was possible to construe the legislation so that an allocation to the health service was not payable where the main contributions were at a rate that was a variation of the 9 per cent. rate. For example, people in their firm's occupational pension scheme pay the lower contracted-out rate of contributions, which is currently 7·2 per cent., or will be 8·2 per cent.
There is ambiguity about whether those contributions, which, of course, are quite a large part of the total, were properly covered by the 1989 Act. Clearly, that would be quite contrary to the long-standing tradition of the health service allocation, and contrary to what the Government and Parliament intended. It could not possibly have been intended at the time. That is why the simple amendment before the Committee aims to place the matter beyond doubt with retrospective effect.
As I mentioned on Second Reading, I share the scepticism and reluctance to which hon. Members have referred about retrospective legislation, but here we have an instance of not trying to change the policy's intention. We are not trying to change anything that has been done over the intervening years. We are removing any ambiguity about the legal cover, so that payments can be —and have been—properly made out of the national insurance fund to the NHS.
I hope that that is a relatively clear explanation, and that it answers the points that hon. Members have raised. In the light of that, I hope that the hon. Member for Garscadden will feel free not to press his amendment.

Mr. Cryer: It is worth commenting that the explanation from the Minister is perfectly understandable, but it demonstrates the dangers that face the House when we hand over to Ministers the powers to make delegated legislation. By a quirk, the requirement for this change is by primary legislation. There are some parts of delegated legislation that are not subject to any further parliamentary procedure. Over the years, this quite significant error was not detected when the legislation went through its Committee stage, or at Second or Third reading. Now that the Government have come to amend it, the faulty interpretation has been discovered.
It behoves us all to ensure that legislation is examined as scrupulously and tightly as possible. It is a reflection on the Government that they are putting this Bill through the House rapidly, and other bits of legislation from time to time under a guillotine. It has not happened on this occasion, but there is always the danger that, if legislation is examined under pressure and in haste, that sort of dangerous fault can develop.
Although in this case there has been no question, one of the difficulties—

The Chairman of Ways and Means (Mr. Michael Morris): Order. The hon. Gentleman is making a point about Second Reading. He should be speaking directly to the specific amendment.

Mr. Cryer: I am just coming to that, Mr. Morris.
There is a danger that, if we do not table amendments that are sympathetically treated by the Government, such as the amendment before us, they will push legislation through and incorporate the sort of errors that have been

discovered on this occasion. It is a lesson for us all that we must be as zealous as we can in ensuring that legislation is as clear and free from interpretation, particularly where, unlike this, challenge can be made through the courts, because, if legislation goes from this place that is open to challenge in the courts, it means that we have all failed.

Mr. Dewar: I take seriously your strictures about wandering, Mr. Morris. It might help you if I said—I can speak only for myself—that I do not intend to delay the Committee on clause stand part. The debate on the proposed removal of subsection 3 will allow me to say all I want to say on the matter.
I am disappointed that the Minister did not find the error himself. I have watched him for only a short period, but he always strikes me as keen. When I was a boy, I was a great enthusiast of the novels of P. G. Wodehouse, in which there was a character called "the Efficient Baxter". He was an extraordinarily diligent secretarial figure, who went around making a perfect pest of himself by discovering things and pointing out the errors of other people's ways. The Efficient Baxter had rimless spectacles that gleamed even when the sun was not shining.
The Under-Secretary has not got that way yet, although his forehead is not a bad substitute. I hoped that he would have performed an Efficient Baxter-like task and discovered a lacuna in the legislative cover for the activities of his Department that had gone undetected for a long time. We must live with that disappointment, and I am prepared to do so, but I hope that the Minister does better next time.
9.45 pm
I followed most of what the Minister said, and I am prepared to accept his explanation. This is a highly technical subject. In my early days in the job, I used to sit and listen to people talking about LELs and UELs, using all the jargon and shorthand of the national insurance contribution world. It took me a long time to understand what all that meant. For a while, I thought that they were referring to American colleges or football teams. It was only after a while that the truth dawned.
The Minister has allayed my reasonable fears, and perhaps even my unreasonable fears, and it may be only that the de minimis rule has gone slightly wrong. I am happy that is should be put right in this way.
My hon. Friend the Member for Bradford, South (Mr. Cryer has done us a service. I hope that he will not be hurt when I say that there are occasions, coming late through the corridors when I have heard Members, usually Conservative Members, saying uncharitable things about my hon. Friend. [HON. MEMBERS: "Never!"] I am afraid that it is true. It is usually because he has had the courage and tenacity to stand up to speak in a debate on a Ways and Means resolution or a money resolution, to ventilate something that has caught his fancy and his attention. He is not normally closely associated with me in Labour party terms.

The Chairman: Order. I have great difficulty in relating what the hon. Gentleman is saying to amendment No. 4, but perhaps it will become clear.

Mr. Dewar: I am happy to say that it may not become clearer, because it is about to stop. I was, in passing, making the point that an outsider would say that my hon. Friend the Member for Bradford, South and I illustrate the


rich diversity of opinion that co-exists happily within the Labour party. I admire his work as Chairman of the Standing Committee on Statutory Instruments, and he is right—even comparatively technical matters such as this should be properly challenged and scrutinised. I know that, in dark and secret places, he spends hours carrying out that task, and we are grateful for that.
Although we have discovered nothing of great moment in this exercise, it is right that the Minister should be forced to explain matters and, where we see the appearance of a retrospective provision, due explanation should be given. In this case, due explanation has been given. I rest content and beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.

Clause 4

CORRESPONDING PROVISION FOR NORTHERN IRELAND

Question proposed, That the clause stand part of the Bill.

Mr. Dewar: Will the Minister say something about the clause? The week has been dominated by Irish affairs of one sort or another, and we have here the corresponding provision for Northern Ireland. I should like to know how the machinery will work. 1 say that rather apologetically, because I understand that there is a different system over there—one that reflects the tensions, difficulties, frustrations and worries of the political and physical situation there.
I recognise, for example, that many statutory foundations must be laid here which do not have to be laid for Northern Ireland affairs. Obviously, the Order in Council is the instrument that governs in this matter. It would be interesting for the Committee if the Minister could explain just for a minute—I do not invite a learned paper on this—how this will operate in Northern Ireland, what the safeguards are and what the legislative foundation is on which the officials will work in gathering and administering this particular increase in national insurance contributions.
You may remember, Mr. Morris, because you may have been in the Chamber for at least part of these proceedings, that there was no need for a money resolution for Northern Ireland. I asked what happened in Northern Ireland and was told, slightly dismissively, that such a resolution was not necessary. Now is the chance to discover why and how the difference exists and operates.

Mr. Hague: I can give a brief explanation which will set the hon. Gentleman's mind at rest and clarify the matter.
Clause 4 provides that a corresponding Order in Council under the Northern Ireland Act 1974 will be subject to the negative rather than the positive resolution procedure. Hon. Members who take an interest in Northern Ireland legislation will be familiar with this provision. It simply gives advance warning in the Bill that corresponding provisions will be anacted in Northern Ireland.
It is designed to ensure immediate parity for people there with the arrangements that will apply in the rest of the United Kingdom. The purpose of the clause is to make it clear to Northern Ireland Members that they can take part

in the debate on the Bill's substantive provisions in the knowledge that any change made to its substance will be made later in parallel Northern Ireland legislation.
It is worth noting that clause 4 does not apply to clause 3, as clause 3 deals specifically with amendments to the corresponding legislation for the Province. Clause 4 applies to the rest of the Bill, which does not deal specifically with Northern Ireland. I hope that that has clarified the matter for the hon. Gentleman.

Mr. Dewar: We are privileged. Not only has the junior Minister mastered his brief on this, but we have present the Minister of State who is long conversant with Irish affairs and no doubt can help us out.
As I understand the Minister's explanation, he is saying that this is a trigger. It flags up to any Irish Member that he can wholeheartedly take part in our debates, knowing that there will be some form of legislation put in place by Order in Council. I presume that that procedure does not involve the elected representatives directly or any form of debate or discussion, at least in the public forum. Therefore, Northern Ireland Members can come along and share in the excitement of our deliberations in the certain knowledge that what is decided will then be reflected.
I do not know what the Council of the Order in Council is. I presume that it is the Secretary of State for Northern Ireland—one Privy Councillor, rather than Privy Councillors, which is one what usually thinks of. I presume that it is not a body with a set membership that meets round a great table like the great Council of the North in the 15th century, sending riders out in all directions with the glad tidings of what the great men had decided. In any event, I think that I understand the point.
One subsidiary question is of interest. At one point I set out to draft a series of amendments—they may be on the amendment paper—which were intended to turn this from a negative to an affirmative procedure. It was pointed out to me by various people who are much more expert than I that that was not necessary, because I was merely returning the law to the state in which it was. Therefore, the whole matter was redundant. But is there some sort of change in the procedure in Northern Ireland that reflects short-term problems and which means that certain matters do not apply? Is the negative procedure a result of that? I did not quite follow that point. I know that the Minister will have followed my halting attempts at an explanation and will be able to come up with a clear exposition of the situation, to which I look forward.

Mr. Hague: The hon. Gentleman is correct and we are now at one in our interpretation of the clause. It is a good description to say that the clause is a flagging-up for Northern Ireland Members. It means that they can participate in deliberations on the matter knowing that it will be reflected in Northern Ireland legislation, despite the fact that most of the rest of the Bill does not specificially refer to Northern Ireland. I am not aware of any special circumstances that have led to any change in procedure, but if there are any I shall write to the hon. Gentleman and make that clear.

Mr. Dewar: I do not want to turn this into a dialogue. That seems inappropriate in the Chamber. One would feel more at home in Standing Committee in such an exchange.
Clause 4 says:
An Order in Council … which states that it is made only for purposes corresponding to those of section 1 or 2 of this Act—



(a) shall not be subject to paragraph 1(4) and (5) of that Schedule … but
(b) shall be subject to annulment in pursuance of a resolution by either House of Parliament.

I presume that that means that if we were not specifically excluding paragraph 1(4) and (5) of the schedule, which the rubric in brackets helpfully tells us is an affirmative resolution of both Houses of Parliament, the Order in Council would be subject to an affirmative resolution. Therefore, the fact that we are taking that out must be for some special purpose and reason. In other words, in making the Order in Council subject to a negative resolution, we are upsetting the norm. We are rebutting the presumption of what would normally happen in terms of paragraph 1(4) and (5) of schedule 1 to the Northern Ireland Act 1974. What I am trying to get at is why we are upsetting the norm here.
It is as clear as the nose on my face that the Order in Council would usually be subject to an affirmative resolution. We are rebutting that and making it subject to a negative resolution, and the simple question is why.

Mr. Hague: The best way to explain this to the hon. Gentleman is to say that there is no benefit in making the Order in Council subject to affirmative resolution. Doing so would provide a separate opportunity for Members of Parliament to debate the application of the changes to Northern Ireland, but all those changes can be debated during the passage of the Bill.
Therefore, although it would provide an opportunity for an additional debate as it specifically relates to Northern Ireland, using the negative resolution procedure is perfectly in order on this occasion because Northern Ireland Members have had the opportunity to participate in this debate. As it happens, they are not here and have not participated, but had they wished to do so, they could have used this opportunity rather than the opportunity that would have been given by the passage of an affirmative resolution through the House.

Mr. Nigel Spearing: Listeners to the exchanges might have been foxed. Does the Minister agree that, in effect, he is denying Northern Ireland Members the opportunity to debate the matter on an affirmative resolution? If I am wrong, please tell me. In respect of legislation for Yorkshire, it would be perfectly possible, would it not, for the hon. Gentleman or any other Member from Yorkshire to participate on the Bill, but if there was no opportunity to participate on an affirmative resolution when it applied to Yorkshire, they would be denied the opportunity?

Mr. Hague: They would be denied the opportunity of participating in a debate on an affirmative resolution, but not denied the opportunity of participating in debates during the passage of the Bill. Therefore, Northern Ireland Members will have had the same opportunity as all hon. Members to participate in the debate. As it happens, they have chosen not to do so but the same legislation applies to them. The effect of the Bill is the same for them as for the rest of the United Kingdom and the effect of this part of the clause is merely that the debate is concentrated on the passage of the Bill, rather than requiring further affirmative resolutions, confirming what we would have dealt with already during the Bill's passage.

Mr. Dewar: I think that I should bale out of this discussion while the going is good. I may be tempted to tell the Minister that there is an obvious follow-up question, to which he will already have turned his mind. If he is saying that there is no point in having an affirmative resolution procedure because, ultimately, the debate is in the Chamber and Northern Ireland Members have a right to participate in it, I cannot understand why the normal powers under schedule 1 to the 1974 Act envisage that there should be an affirmative resolution. We are now upsetting and removing that provision and substituting an unusual set of circumstances—a negative resolution.
May I put the matter simply? I promise that this is my last effort. In what circumstances would schedule 1 and the affirmative resolution apply and not be withdrawn by the legislative drafting that we are now considering?

Mr. Hague: The circumstances in which that would not be done would be if there were no risk of the affirmative resolution and passage of the Bill being so separate in time that there was no parity between the different parts of the United Kingdom. Because the measure is designed to take effect in April 1994, the time in which an affirmative resolution could be considered, which would introduce the changes in Northern Ireland at the same time as in the rest of the United Kingdom, would be very limited. To avoid the risk of the measure being implemented at different times in different parts of the same country, the procedure is adopted in this case.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 5 ordered to stand part of the Bill.

New clause 1

ANNUAL REPORT TO PARLIAMENT

"The Secretary of State shall publish on an annual basis a report to Parliament setting out the yield from the increase in primary Class I contributions payable as a consequence of the provisions of section 1 of this Act."-[Mr. Dewar.]

Brought up and read the First time.

Mr. Dewar: I beg to move, That the clause be read a Second time.
We have had a passage of arms over some minor textual matters and the constitutional machinery of another part of the United Kingdom. In sharp contrast, we now move to new clause 1, which is general in its impact and raises some fairly broad issues. I therefore intend to deal with it in a broad way but hope that I shall not stray or test your patience, Mr. Morris.
I do not intend to rehearse my objections to the main thrust of the Bill or to clause 1. I shall not talk in such detail about our reservations and fears about the substantial increase in taxation represented by the hike from 9 per cent. to 10 per cent. However, what has undoubtedly arisen during these exchanges is evidence that there is a good deal of confusion and no meeting of minds either between the Labour party and the Conservative party or between those parties and the Liberal Democrats. The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) takes an individual view, as does his party. In some cases it is an impractical view, but it is always interesting.
On no part of the Bill will there be a more important debate in the period that lies ahead. We need not go into the merits of the new clause, but we can all agree on one matter —that many question marks exist over the traditional way


in which we deliver our services and over the proper weight that should be given to the contractual principle between the Government and governed and the extent to which people are buying entitlement when they make national insurance contributions.
There are people—I am not one of them—who have put big question marks over the whole idea of the contributory principle, suggesting that national insurance should just be a form of taxation, perhaps hypothecated, but still taxation. Others go further and suggest that we get rid—

Dame Elaine Kellet-Bowman: Does the hon. Gentleman agree that the Labour party under the late Lord Attlee made a grave error by not funding the scheme when it was brought in? All our problems have stemmed from that. It is an in-and-out scheme, whereas it should have been funded, as others are.

Mr. Dewar: I understand what the hon. Lady says. I was at a conference recently where a very elderly person told me what Jim Griffiths had told her. About 20 minutes later I lost the thread of the story, but it was some sort of explanation of why the scheme was not funded at that. time. Perhaps in a few years' time the hon. Lady herself will be telling people similar stories.
In any event, whether or not the scheme should have been funded, it is not funded. I believe that there is some virtue in dealing with the realities of the world in which we live, and I commend that approach to the hon. Lady.

Mr. Jeremy Corbyn: Is it not rather odd that the hon. Member for Lancaster (Dame E. Kellett-Bowman) has withheld this crucial piece of information for so long? Perhaps she should have revealed it long ago so that we could have laid the blame at the door of poor old Clem Attlee.

Mr. Dewar: Well—

Dame Elaine Kellett-Bowman: My remarks arose precisely out of the observation that the hon. Member for Garscadden was making.

Mr. Dewar: I must get on. The tragedy is that, although I know Jim Griffiths said something, I do not know what it was. It must therefore remain a mystery.
My point is that important arguments are developing, some of them so fundamental as to question the whole principle of the contributory system. Perhaps it is apt to point that out in the week in which Sir Peter Barclay retires from his post as chairman of the Social Security Advisory Committee. He made a speech not long ago in which he directly suggested scrapping the whole system—the Contributions Agency and the recording of contributions —and treating national insurance as a form of taxation, whereupon we could get on with life.
There are fundamental difficulties with this approach. I do not endorse it for one second; I just make the point that these major arguments are beginning to develop. Perhaps in a strange way I should pay tribute to some of the more unpleasant theories emerging from the Department of Social Security. They have certainly widened the argument and drawn new people into an area that used to preoccupy specialists alone.
My impression is that more and more people who are not experts or professionals, and who are not involved

directly, are becoming uncomfortably aware of the importance of these arguments and want to know more about them.
There is a real difficulty with what one might term the dissemination of information. There is also some difficulty about a debate that is often conducted under the guise of calm and rational discussion but which is actually highly polemical. We have to rely a great deal on the Government for much of the information. The word "Government" is reassuring in one way. It suggests impartiality—information provided by pure distillation from theory and from fact. The truth, as we know, is the very opposite. Government information is often highly tendentious; and the Government's approach is often merely presentational.
At the moment the Government are attempting—wrongly in my view, but I am parti pris in the argument —to suggest that the financial difficulties of the social security and contributory systems are much worse than they are. There are long-term trends which are of concern, and I do not deny that they must be dealt with and catered for in any future plans.
I will draw the Social Security Advisory Committee into the argument again, because that point was made in its ninth annual report which was published this week. It does not take the view, and nor do I, that we are in such a crisis that we are teetering on the edge of an abyss and that we have to send in the demolition men and the broker's men, or the system will implode or explode.

Mr. Corbyn: Has my hon. Friend had time to read the pamphlet from the No Turning Back group on the future of the pension system and the welfare state? That pamphlet seems to give the true version of the Government's intentions, which are to reduce consistently the value of the state old-age pension and to boost the private pension industry at the expense of the state scheme. The state scheme inevitably can provide for everybody, whereas private schemes can provide only for those who can afford to pay into them during their working lives.

Mr. Dewar: I was talking about the Government's information and expressing doubts about some of their presentational factors. To take me then to the No Turning Back group is a little unfair—that is a rather different kettle of fish.
I agree with my hon. Friend that is a pernicious pamphlet and, if he wants to collect such things, he should read the recent pamphlet from Dr. Madson Pirie. My hon. Friend may consider Dr. Pirie's remarks on private pension schemes and their virtues in the light of recent news from the Securities and Investment Board, the Life Assurance and Unit Trust Regulatory Organisation and the Financial Intermediaries, Managers and Brokers Regulatory Organisation. However, that is a different issue.

Mr. Hague: indicated assent.

Mr. Dewar: I see that the Minister agrees with me on that. We want to try to get impartiality into the debate, and a basis of information on which we can conduct the argument. I will not trespass on it at the moment, but new clause 4 tackles the same problem. We are asking the Government to enters lists in a more public sense and to provide information and assistance.
I will give a brief example which has occurred to me, concerning an issue on which I have written to the Minister. He may have the letter on the desk at moment.


There is a complex and difficult argument, as the House knows, about retirement ages and the state retirement scheme. One of the factors which influence that deeply is the demographic factor and the projection of the number of people above the retirement age.
All hon. Members have their little conglomerations of facts which they can trip out in an argument and which become user-friendly. One of my facts is that, in the year 2030, there will be 14·1 million people over pensionable age in this country. I got that figure from a Government publication and it was an authoritative figure, which was used both in the text and in the graphs. The figure was used for a long time in the consultative document for discussion on the equalisation of the pension age. The Leader of the House will be familiar with the figure.
Two months ago, I was at a conference that was organised by Legal and General at which the Secretary of State spoke. Rather to my surprise, the right hon. Gentleman suddenly said during his speech that we would have great problems with demographic trends because in the year 2030—the very year to which I have referred—there will be 15·5 million people over retirement age in this country. The statistic appears to be the same, but—I do not want to use a pejorative term and say that it was invented —suddenly almost 1·5 million people were introduced into the argument.
Clearly that is a major change, and a factor which must be taken into account. I am not being funny about this, and I genuinely do not know why that happened. I can tell the House that I have watched carefully, and 15·5 million is now established in the Government's little group of statistics. The Prime Minister uses that figure constantly, for example, as does the Secretary of State.
I have written to the Minister and I wait with interest to ask how that had happened, and on what basis the Government suddenly found another 1·5 million pensioners. The hon. Member for Lancaster will appreciate this because she takes a great interest in these matters, and I acknowledge that she is a frequent attender of debates such as these. In 2030, the harmonisation of the pension age at 65 will have taken place, if the Government's plans come to fruition. We would have expected that, because they want to cut the number of people over pensionable age.
Not only have we an increase of 1·5 million people, but in circumstances which have changed since the original estimate and which one would have expected to have lowered the estimate and not increased it. It is mysterious and interesting; that is why I am interested in impartial reports and bringing some objectivity into the debate and the facts on which it is based.

Mr. Alistair Darling: Is it not the case that, in crude terms, the Government are trying to soften up opinion to justify cuts in pension provision and other welfare benefits? They are grossly exaggerating the problems that Britain and other countries face. That is why we see such a slapdash and casual acquaintance with the facts.

Mr. Dewar: I have a great deal of sympathy with that view. It will be widely shared among Opposition Members, but I have no doubt that it will be strongly repudiated by the Government.

Dame Elaine Kellett-Bowman: Will the hon. Gentleman give way?

Mr. Dewar: In a moment.
It may depend on whether the Chief Secretary or the Chancellor wins the battle of the Treasury, whether it is a real battle or a presentational exercise. Perhaps it is another aspect of the matter into which I shall not delve.
The new clauses address the need to establish a proper basis for the discussion.

Dame Elaine Kellett-Bowman: If there are mysteries here, there must be mysteries in all the other countries in Europe. As the hon. Gentleman no doubt knows, the German Government said exactly the same thing in their submission to Mr. Delors—that the pension burden in Germany will be enormous. It is the same in France, Sweden, Norway and Denmark. We are not the only ones who are discovering a demographic time bomb.

Mr. Dewar: I understand that entirely. The hon. Lady has heard Ministers saying it on many occasions. The term demographic time bomb is, in a sense, hyperbole. If she looks at the facts and figures, she will see that we are infinitely better placed that most western European countries.
The country in the greatest mess in demographic terms, for historic reasons, is Germany. The position there is extremely serious and Chancellor Kohl has been taking energetic steps to get to grips with it. It is a problem on a different scale from the one that we face in Britain.
The hon. Lady may be a victim of the hype that I am trying to get over. I suspect she has been listening to Ministers. I do not blame her; it is how Back Benchers operate, but she is over-simplifying the idea that we cannot survive because we have a problem on the same scale as that of Germany.
I can recommend to the hon. Lady—if she wishes, I shall arrange for a copy to be sent to her—an excellent and substantial piece of research from John Hill of the London School of Economics, which deals with social security expenditure which she will find genuinely interesting. She could then measure it against some of the statements from Government. But I must not argue the case.

Dame Elaine Kellett-Bowman: Does the hon. Gentleman accept that, as we are spending an increasing amount of money on our national health service and cures are being found which would have been unthinkable even two or three years ago, not only will the number of people living increase, but their quality of life will improve? It means people are not only living on to a much greater age, but they actually enjoy living on to a much greater age.

Mr. Dewar: The hon. Lady is happy. I agree with her entirely.

Dame Elaine Kellett-Bowman: I shall live to be 100.

Mr. Dewar: Do not depress me.
The hon. Lady makes an important point and I agree with her. it is a complicated equation. It is true that we are closing acute beds, sometimes over-enthusiastically, but in some cases for good reasons, as surgery can be carried out in an out-patient department which once would have required extensive in-patient treatment.
I remember being in hospital for five weeks for something that my doctors now tell me would be done on an out-patient basis. It is a complicated equation.
Let me make one more point to the hon. Lady. The interesting document produced by the Government, "The growth in social security: International comparisons", with which some of my hon. Friends will be familiar, contains evidence of the expense and burden that we will have to carry and, as a civilised community, ought to carry. It is also important to remember that, if we take social protection expenditure—that is, the health service and the benefit system put crudely altogether—as a percentage of gross domestic product, in Europe the burden is 26 per cent. and in Britain it is 23 per cent. We are well below the European Union average.

Dame Elaine Kellett-Bowman: We must be more efficient.

Mr. Dewar: We may be more efficient, but Ministers often lead us to believe that we are uniquely at risk because of ever-escalating costs, which cannot be controlled and are now running away in a disastrous fashion.
The contributory principle—the inter-relationship between the national insurance fund, the national health service, the benefits and pensions systems—is a key area. There is a genuine case for an annual report on the kind of increase which has been included in the Bill. If we can receive that kind of impartial information, we will have a better chance—perhaps not a great chance—of a well-informed debate and of reaching the right conclusions at the end of the day, even if we start from a different political point of view.
There was a time when at least we had common aims and objectives—even though we argued about the way in which they could be achieved. One of the sadnesses of recent years is that we can no longer agree on the aims and objectives and the proper community approach. If we are to have an argument of such far-reaching importance, we deserve to be better served by the Government's statistics.

Mr. Wicks: I rise with great enthusiasm to support the proposal that we should have an annual report on these very complex matters. The debates on Second Reading and in Committee have shown that we are at something of a crossroads; there are different scenarios about the future of social insurance or some alternative to it.
I was intrigued by the intervention of the hon. Member for Lancaster (Dame E. Kellett-Bowman) when she sought to blame Lord Attlee for not supporting a funding scheme. Tha allows me to say, with something of an exaggerated flourish, that I knew Clement Attlee. I refer to a short conversation that I had with him when I was a schoolboy. The conversation with the then Lord Attlee, in county hall, London—in the good old days when we had a London county council, a council that my father had the honour of chairing in its final year—went something like this: I said, "Hello, sir." He said, "How are you, young man?" "Fine, sir," I replied. I regret that I did not seize the opportunity, in the middle of this historic dialogue, to say, "What about funding, Lord Attlee?"—but next time I will.
The serious point is that there are different scenarios about the future of national insurance, or social insurance or some alternative. An annual report would enable us to monitor performance against objectives. It could become as important as the annual reports from the Supplementary Benefits Commission, as it was, and more recently the Social Security Advisory Committee. Many Opposition Members will pay tribute to the work of Sir Peter Barclay, whose tenure as chairman of that committee comes to an end at the end of the month. I have great respect for his work; his reports have helped enormously and have added strength to the proposal made by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar). I believe that annual reports could become important state documents.
One scenario is that we will increasingly see a reduction in the principle of national insurance and a move towards a kind of residual social welfare system. That would come about through a reduction in the value of national insurance benefits, a move from state provision to occupational welfare—we have seen an example of that recently. It would come about also through the privatisation of what were formerly national insurance benefits—we have seen that with private pensions.
I would have major worries about that. To "residualise" welfare and guard it carefully with a means test is to increase the inequalities in our society—albeit at a time when new language is used to describe state benefits and state provision. Unemployment benefit, for example, has become a "job seeker's allowance". I wonder where it will all end. Perhaps the Government should consider calling the homeless "home owner aspirants", which would be less negative and less politically embarrassing.
Let me give another example of the linguistics of social policy. I offer this purely as an illustration, not as a prediction. If one day a Government anxious about public expenditure were to propose the introduction of euthanasia for the poor, no such crude and vulgar language would be employed. The measure would be introduced under the acronym EHOP—"early heaven opportunity programme". The language of social policy is certainly becoming more intriguing.

The Chairman: Order. I am listening attentively to what the hon. Gentleman is saying—

Mr. Wicks: rose—

The Chairman: Will the hon. Gentleman sit down for a second? The new clause is entitled "Annual report to Parliament". Whether the language to which the hon. Gentleman refers will form part of that report is not immediately evident from what he has said so far; perhaps clarity will soon prevail.

Mr. Wicks: Certainly the annual report will be full of language—and, most important, it will help us to enable both public and Parliament to determine the direction in which the national insurance system is going. That is why I support the idea.
An alternative to the idea of a residual welfare system, in which means-testing increasingly replaces national insurance, is the idea of enabling the annual report to identify other possibilities. Some people say, for instance, that the concept of national insurance is no longer relevant in a modern society. They claim that it is not actuarially sound. It is not funded, they say, so why not come clean and make it part of income tax? The annual report would determine whether the system was moving away from national insurance and towards taxation.

Mr. Corbyn: How would the report deal with the position of people who were denied invalidity benefit that they could otherwise have received because of the new rules introduced by the Secretary of State? Would it examine the question of the refusal of benefits under a means-testing system?

Mr. Wicks: I certainly hope that it would. It needs to be independent and objective when assessing the overall impact of such measures.
Among other things, the report would enable us to establish whether national insurance has a future. I believe that it has, but that we need to reinvent or reconstruct the concept of social or national insurance. The issue was discussed on Second Reading. I think that any new social insurance system would have to establish whether, 50 years after Beveridge, the risks faced by modern society were being addressed. If Beveridge were alive today, although he would recognise many of those risks—for instance, the risk of unemployment, job seeking or whatever the language is—he would also recognise that new risks had developed. The annual report would help us to assess them.
Many of the growing number of frail elderly people will need not only an income—a pension—but care. That is one of the major forms of social insecurity nowadays. It is a major risk that insurance should help us to tackle. It may be that in a reconstructed national insurance scheme people could be insured against the risk that one day they may need care costing hundreds of pounds a week, perhaps £20,000 or £30,000 a year, in residential accommodation. A modern national insurance scheme would help us to tackle such risks.
The idea of an annual report to help us to shine a light on the practice and policy of social insurance is a vital part of the Bill. I hope that it will become part of the Bill and that the Committee will accept the proposal of my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar).

Mr. Flynn: It is a pleasure to speak on this vital new clause. We must look to the report to Parliament as a sort of gatekeeper—to use the word used by the Minister. It should be seen as a moderating influence, someone to guard the gate. My misgiving about the use of that word is that the Spanish word for gatekeeper is portillo. That may be some sort of sign.
I have attended almost every minute of the debate and I have been slightly distressed to see that the Secretary of State has had trouble keeping his eyes open. Earlier today, I had a conversation with a Treasury Minister who was purchasing mints downstairs. [Interruption.] This is relevant; it will become clear later. I pointed out to the Minister that there was a notice warning customers about an outbreak of some sort of Asiatic plague at the mint factory and that they should not take mints. I worry that he might be sending them to other members of the Government and it may be that the Secretary of State's apparent indisposition—

The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse): Order. We have gone far enough with that. We must return to the debate on the new clause.

Mr. Flynn: There is clearly a deep division between the policies of the Treasury and those of Ministers in the Department of Social Security. It strikes at the heart of the new clause. The report to Parliament should be seen to be at least an attempt to retain parliamentary scrutiny of the Government's destruction of the welfare state.
The welfare state is not something trivial. It did not happen by accident and was not introduced by just one Parliament. It is the result of the life work of generations of our parents and grandparents. They saw it as a great ideal that society should be organised so as to distribute society's wealth in a way that was fair to everybody. They wanted to ensure that when people reached retirement age they would have about 40 per cent. of their previous salary on which to live out their final days in dignity and relative prosperity. That was the inspiration of Lloyd George and Beveridge and it has had support from all parties until the present day.
There is one question that the Government must answer. Why is it that between 1944 and 1951, when we still had rationing and great troubles and were a poorer nation than we are today—the same applies to the years 1950 to 1955 when we were in a similar position—the value of the pension was greater in real terms than it is now? Also, why are the Government planning for the real value of the pension to be far less in 40 years—when, by all predictions, we will be richer than we are now—than it is now?
I intervened earlier because, as an old lag of these debates—I have sat in on every Social Security Bill since 1987—I was distressed by the fact that none of the many knowledgeable Conservative Members with an insight into social security had spoken. We heard at least one speech from a parliamentary private sectretary, who was reading from a brief, but we have not heard from the hon. Member for Havant (Mr. Willetts), for whom I think we all have great respect and whose works I have quoted in the Chamber. The hon. Gentleman understands the situation and has blown the gaff on the Government's great con. They have successfully convinced the media and the nation that we cannot afford a welfare state any more, that

somehow a terrible disaster has taken place and that we cannot afford a national insurance scheme. I make the distinction between a national insurance scheme and a poor law scheme because one hon. Member referred—

The First Deputy Chairman: Order. The hon. Gentleman is going very wide of the subject. The debate is about contributions, so he should get back to the clause under discussion.

Mr. Flynn: Each year the annual report must contain a critical appraisal of whether we have a welfare state or return to a poor law scheme. I suggest that the authors of that report should become the social—

The First Deputy Chairman: Order. I must insist that the hon. Gentleman return to the clause.

Dame Elaine Kellett-Bowman: He has never been on it.

The First Deputy Chairman: Order. The subject of the clause is contributions, so the hon. Gentleman should confine his remarks to that subject.

Mr. Flynn: Contributions are a vital part of the Bill. Earlier, I challenged the hon. Member for Mid-Staffordshire (Mr. Fabricant) to tell me how they have changed since 1979. He sought assistance from heaven. Perhaps it is not well known that he is fluent in Icelandic. For all its value, his contribution could well have been delivered in that language. The difference is significant. In 1989, the level of contribution—the precise subject of the clause—was 6·5 per cent. The change to 10 per cent. represents an enormous increase of more than 50 per cent. since then.
Let us puncture the myth that we cannot afford a welfare state. We do not need to increase contributions by 53 per cent. over 14 years, or even by 40 per cent. or 20 per cent. If we increase them by 15 per cent., in the next century we will be able to afford pensions that are more generous than they are today.
Who says so? The hon. Member for Havant. Who else? The Social Security Advisory Committee, the organisation that advises the Government, has produced its ninth report and it should be the organisation that produces future reports. The Government have disregarded every other report by that Committee. Throughout my time in Parliament since 1987, I have read all those reports. They are a great guide to parliamentarians on what has happened to the social security system. The advice of the committee that was set up to be objective and independent has been disregarded time after time.
Judging by their contributions and the policies that they have adopted, the Government are driven not by any considerations of welfare or fairness but by blind ideology. They have used the excuse of demographic change—as the hon. Member for Havant says in his splendid document, "The Age of Entitlement"—not because it is true, because it is not. They have vastly exaggerated.
We will have problems in the next century because of the baby boomers which will last for about 13 years. After that, the problem will lessen and we will have a society in which we can provide decent pensions. The reasoning behind the Government's policy—the whole nonsense behind this legislation—is the ideology that everything private is wonderful and everything public is nonsense.
What are our contributions to the national insurance scheme? We will soon be paying 10 per cent.—the highest this century and in history. What will happen to them? If the contributions go into the national insurance scheme, 95 per cent. will end up as benefits. The alternative is to put the contributions into private insurance schemes. When that is done, 50 per cent. will end up being paid as benefits. The other 50 per cent. will be lost in administration charges, profits for the insurance company and commission. That is the time bomb under the Government. That is what contributions are all about.
We have a system of national insurance. Beveridge's inspiration was a scheme based on contributions. What he saw, Mr. Lofthouse, was the insurance schemes that your father and mother and my father and mother had—industrial insurance policies. They paid someone to come to the door every week. Beveridge studied those policies. He said that 50 per cent. of the contributions were lost in the scheme's administration charges. He said that the private insurance companies were more interested in selling the schemes and in their profits than in providing value.

Dame Elaine Kellett-Bowman: The hon. Gentleman is misquoting Beveridge. Beveridge wanted the scheme to be run in gradually. He did not want it to come in immediately. I see that the hon. Gentleman has only a silly bit of paper; I have the Beveridge report. The point is that Beveridge wanted the scheme to be run in gradually. I observed earlier that if the scheme had been funded, all the problems that we have inherited and that we shall pass on to our grandchildren would not have occurred.

Mr. Flynn: The hon. Lady has quoted Beveridge, which, like my hon. Friend the Member for Croydon, North-West (Mr. Wicks), I regard as night-time reading. Beveridge said that he wanted
to ensure that every person fulfilling during his"—
pardon the sexism—
working life the obligation of service according to his powers, can claim as of right when he is past work an income adequate enough to maintain him.
Let me tell the hon. Member for Lancaster (Dame E. Kellett-Bowman) what Beveridge also concluded. He published his report in 1942. He thoroughly investigated the life assurance schemes. His conclusion was that the cost of administration consumed half the money paid in by members. He said that the door-to-door insurance—[Interruption.] If the hon. Member for Lancaster wishes to know about Beveridge, she should listen. I am quoting his report. He said that door-to-door insurance served the interests of companies and the sellers of policies to the detriment of those insured. His preferred solution was a state-run scheme for everyone.
We have a state-run scheme that has been neglected. We are not giving people choice. The Government have very unwisely told people to opt out of the state scheme and go into personal pension schemes. All Conservative Members who have a vested interest and a direct pecuniary interest in personal pensions should not vote on the issue. The Government would lose their majority. The result of this—

Mr. James Couchman: On a point of order, Mr. Lofthouse. Is it in order for the hon. Gentleman to impugn the integrity of Conservative Members during the debate?

The First Deputy Chairman: It is not the tradition of the House, but it is not uncommon that hon. Members on both sides of the House do it.

Mr. Flynn: I have noticed in the Register of Members' Interests that 14 per cent. of Opposition Members have pecuniary interests in various bodies. I have none, I assure you, Mr. Lofthouse. Eighty-five per cent. of Conservative Members have pecuniary interests. I do not impugn the honour of Conservative Members, but I suggest that we should adopt the practice in local government whereby someone who declares an interest in a subject does not vote on it. That is an important reform that we should introduce in the House of Commons, especially as 85 per cent. of Conservative Members have pecuniary interests.
We want a proper annual report to be made by an objective body such as the Social Security Advisory Committee. The Government are not giving choice to the country by offering them personal pensions. They are throwing people to the wolves.

Mr. John Greenway: For the past hour, I have listened to the debate on this new clause and I have yet to hear one argument in favour of it. The hon. Member for Newport, West (Mr. Flynn) talked about a record level of national insurance contributions, which will be the consequence of this Bill. We do not need an annual report to tell us that we are spending a record amount on the national health service and social security. If we examine the Bill and the new clauses, it must be blindingly obvious that if we will the end, we must will the means.
I do not see why we need to spend more money on administration and creating more reports and statistics when we all know the truth. Under this Government, we have spent a 'record amount on the NHS, and we are spending a record amount on the social security budget. All hon. Members have received letters from constituents saying that people are prepared to pay more to fund the national health service. This Bill will enable people to pay more for a better national health service. We do not need this new clause to ensure that that is carried out.

Mr. Corbyn: I shall be brief because the Minister should have an opportunity to speak about this excellent new clause. My hon. Friend the Member for Newport, West (Mr. Flynn) explained why the Government will not support the new clause. It is obvious. If there is an objective annual analysis of what happened to the contributions—what was paid out from them, who did not get them and who was denied them by means testing; and the almost 1 million people who received no benefit whatever despite having paid into the fund during their working lives—the Government will be exposed.
The Government are perpetrating an enormous con on the people of this country. They are increasing contributions in order to pay less and reduce benefits. All pensioners have been robbed of £18 a week because of the break of the link with earnings in 1980 and the substitution of a cockeyed retail prices index. The Government are being cruel and hypocritical by cutting unemployment benefit, despite the scheme being a contributory one. It is


benefit fraud of the highest order. That is what benefit fraud is about. It is not the sort of xenophobic nonsense that the Secretary of State was talking about when he addressed the annual rally of the Conservative party. Of course, to call it a conference would be to suggest that there was a serious discussion going on, which there certainly was not.
An annual report must show the real cost of the state pension scheme and the contributory system. My hon. Friend explained what happened under the old private insurance schemes which predated the welfare state. We are rapidly moving back to a society in which any spiv can set up a pension company, make a great deal of money from it and possibly go bust. The robbery of Maxwell pensioners has exposed the lack of regulations for pension funds. People who are withdrawing from the state earnings-related pension scheme are a £6 billion drain on the national insurance fund. I believe that such matters must be exposed.
The Government rely on secrecy. They rely on the Murdoch press to perpetrate the enormous lie and myth that this country cannot afford a universal benefit scheme or a proper welfare state. We can afford it if the political will is there to do it. The Government's changes to the taxation system over the past 15 years have rewarded the rich with £31 billion per year. That is what it is about. The Bill is simply a minor, introductory skirmish into the great row and debate that will take place about the Government's attempt to smash the welfare state in which we believe so strongly and passionately.

Mr. Hague: This has been a varied debate. You would be angry with me, Mr. Lofthouse, however, if I failed to confine my remarks to the new clause and followed hon. Members down the various alleyways and byways that they have travelled.
The hon. Member for Glasgow, Garscadden (Mr. Dewar) proposed the new clause in the spirit of providing impartial information to the country and Parliament and in the spirit of openness in policy making. I agree with that spirit. It is not a bad idea to have an annual report to Parliament about the national insurance fund. In fact, it is such a good idea that we already do it every February when we lay the re-rating or uprating orders for national insurance contributions. That provides a great deal of information.
The new clause would require the Secretary of State to publish every year an additional report, which would set out the expected income from the contributions paid by employees, in a form that showed separately the income attributable to the proposed increase in the rates of the contributions from 9 to 10 per cent. I see little point in producing such an additional report, which would be confined to one financial impact on the national insurance fund, when the Government Actuary already produces a report, which must be laid with the annual orders that set the rates of contributions and benefits for the coming year. Each year those reports give details of expected contribution income and expected contributory benefit expenditure. They also take into account the effect of any changes that have taken place in the rates or accounts of contributions.
I do not think that there would be much merit in having an additional report. Hon. Members who have argued for more information should be aware that a quinquennial review of the national insurance fund is—

Sir Donald Thompson: Every five years.

Mr. Hague: My hon. Friend has immediately worked out that it is conducted every five years.
That review contains the Government Actuary's long-term financial estimates, which consider the viability of the contributory scheme up to 60 years hence. Opposition Members have rightly said that they want to take a long-term view of the scheme and that review offers that opportunity.
It would be wrong to initiate an additional report. I do not believe in creating unnecessary work for civil servants, who would be called on to provide information that is already ascertainable and available from the reports provided by the Government Actuary. I hope that the new clause is either withdrawn, or defeated in a Division.

Mr. Dewar: I listened with interest, but without much hope, to the Minister. The new clause is a good one and there are powerful arguments for it, despite his best efforts. I am unrepentant about tabling it.

Mr. Hague: What does the hon. Gentleman think about my point about the quinquennial review?

Mr. Dewar: I always find that the hon. Gentleman's presentation is excellent. Quinquennial reviews are obviously admirable institutions, but on this occasion it is clear that the quinquennial review about which he is talking in no way meets the eloquent points that have been raised not only by me, but by my hon. Friend the Member for Newport, West (Mr. Flynn) and others.
In the circumstances, I do not see any point in delaying the Committee with a vote.

Mr. John Greenway: Shame.

Mr. Dewar: I would have thought that that was a cause for celebration and cheer on the hon. Gentleman's part. Conservative Members should recognise a Christmas present when they are offered one. It seems very uncharitable and unseasonable for Conservative Members to mock in this way.
On this occasion I will beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Bill reported, without amendment.

Order for Third Reading read.

Motion made, and Question proposed, That the Bill be now read a Third time.

Mr. Bradley: We have had an extremely interesting Committee stage. If any merit has come out of the fact that the Bill has been guillotined—there is only one merit—it is that my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) has been able to participate so effectively in the Committee. He has brought great knowledge and a particular humour to our proceedings. We should welcome that as we run up to the end of this part of the Session.
On Second Reading, we concentrated very much on the consequences of increasing the national insurance contribution by 1 per cent. from 9 per cent. to 10 per cent. It is worth repeating yet again what the real consequences of that are. Through the back door, the Government are giving the biggest hike to taxation. The increase will bring


in a staggering £2·26 billion in revenue in a full year. If the Government had been honest in the Budget and had raised taxation, they would not have received as much money. They would have received £360 million less than they are getting from this massive imposition of national insurance.
What has come clearly out of our debates today and yesterday is what the Government failed to tell the British people during the general election campaign. The Conservatives claimed that they were the party of low taxation. All that myth has now been exploded. I do not believe that the British people who, from next April, will on average have to pay £9 or £10 a week extra in total taxation and £16 on average the following year will ever again believe this Government.
This is the biggest hike in taxation. It is very pleasing that the former Chancellor, the right hon. Member for Kingston upon Thames (Mr. Lamont), is in the Chamber to listen to the description of the effects of his policies. The new Chancellor—I quote from the Daily Mail—admitted the truth to the Treasury Select Committee yesterday:
Clarke comes clean. Kenneth Clarke admitted last night that this year's Budget has raised the equivalent of 7p on the basic rate of income tax.
We know that, in conjunction with the national insurance contribution, people throughout the country will suffer, and suffer and suffer from the consequences of the Government's policies.
Through our debates, we have also been able to winkle out from the Government some important facts not only about the consequences of the increase in national insurance contribution, but about the effect on people of not being able to draw certain benefits in future. Two issues are worth reinforcing on Third Reading. I welcome our future opportunity to debate in greater detail the new job seeker's allowance. We have found out not only what was clear from the start—that it was about reducing the amount of benefit and about reducing eligibility from 12 months to six months—but, most importantly, that anyone under 25 who receives the new job seeker's allowance will get it at a reduced rate. That is a lower rate of income support. It is also clear that the dependants' addition will be significantly reduced under the new scheme.
It is a disgrace and scandal that the 3 million officially unemployed people will pay the price, not only through a reduction in the eligibility to benefit to six months, when many of them, through the contributory system, have paid into the fund and believed that they had a right to proper levels of unemployment benefit as a result, but young people up to the age of 25 will have their benefit reduced to income support level. That is a disgrace, and when it is properly understood, there will be a furore and campaigns against what the Government are proposing. The Minister may laugh, but the 3 million unemployed are not laughing. They are suffering from the consequences of the economic mismanagement of the Government.

Dame Elaine Kellett-Bowman: On a point of order, Mr. Deputy Speaker. Is it in order for the Opposition spokesman to mislead the House? There are not 3 million unemployed, and he ought to know—

Mr. Deputy Speaker: Order. The hon. Member for Manchester, Withington (Mr. Bradley) is responsible for his own speech.

Mr. Bradley: I understand exactly what the hon. Member for Lancaster (Dame E. Kellett-Bowman) is saying. I understand that, over the 14 years of this Tory Government, they have fiddled the figures 19, 20 or 21 times to cover up the real total of over 4 million unemployed—that is, all those eligible to look for work, but ineligible to claim benefit because that right has been taken away from them. We understand what is going on, and we shall fight to protect the interests of those 4 million people.
You have not only curtailed the right to benefit for unemployed people. We shall look in great detail at the second exposure resulting from the debates in the past couple of days. That is the exposure of the way in which you are going to treat people with an incapacity, people who are sick and those who have disabilities. Not only will their right to a decent level of benefit be curtailed through the draconian measures that you are likely to introduce, but—

Mr. Deputy Speaker: Order. The hon. Gentleman is getting a bit carried away. The Chair is not responsible for anything in this Bill, or any other.

Mr. Bradley: I accept what you say, Mr. Deputy Speaker. I had no intention of drawing you into the net of the guilty people who sit on the Treasury Bench, who will significantly reduce the living standards of thousands of disabled people through the imposition of the new assessment of incapacity.
We know that such people will be caught in a trap, a trap that we exposed in the debate on the Statutory Sick Pay Bill yesterday. Because of the extra burden of having to pay statutory sick pay, employers will look carefully at people's health records. People with health problems will be denied the right to a decent benefit. They will be caught in a trap—too ill to work but not ill enough to receive benefit from this miserly Government. We are determined that, when the Bill dealing with incapacity goes into Committee, we shall look at every line dealing with the way that assessments are done. What you are doing—

Mr. Deputy Speaker: Order. I have already told the hon. Gentleman that the Chair is doing nothing. I am only conducting the debate, in accordance with the rules of procedure. I should be grateful if the hon. Gentleman would bear that in mind.

Mr. Bradley: I apologise. As we enter the Christmas period, we feel even more the ways in which the people whom we represent are being downtrodden. I apologise for getting emotional. We are trying to protect the vulnerable —the people who do not have the income to match that of Tory Members. We are trying to protect them against the ravages of an incompetent Government, who in one day can lose £7 billion. At the same time they try to cut the benefits of the most vulnerable people in society. Such are this Government's priorities.
The Secretary of State is so appalled and is such a guilty man that he cannot even come to the Chamber to hear the closing speeches on this legislation. Where is he? I think I perhaps know. I suspect that there is an argument going on between the Chief Secretary to the Treasury, the Chancellor of the Exchequer and the Secretary of State about the other area that we are determined to protect—the right to a decent level of state retirement pension.
The Chief Secretary is not interested in the future needs of people for the state retirement pension. He is looking for it to be continually eroded so that it has no real value in future. He believes that the state should not provide this sum in the 21st century and that everyone should look to the private market for an income in their old age. That is not good enough for us. We shall protect the elderly. We do not accept the arguments put to us and directed clearly by the Chief Secretary. We shall ensure that the millions of elderly people are properly protected by the policies of a Labour party committed to the interests of the elderly.
Today's debate has given my hon. Friends adequate opportunity to expose the Government's hypocrisy and the way in which they are trying to con the British people into believing that if direct taxation does not increase, somehow national insurance contribution increases are a side issue and do not affect pay packets in the same way. I assure Ministers that on 1 April next year when the public receive their pay slips the Government's con will be exposed.
At the same time as incomes are ravaged and limited by tax and national insurance impositions, bills will come through doors demanding VAT on fuel. Then the public will look at how mortgage interest tax relief has been eroded; they will look towards future travel and holidays and see that they have to pay tax on that. As their bills come in for home insurance and car insurance, it will be tax, tax, tax.
That from a party that went into the general election saying that it was the party of low taxation, that it had no plans and no need to raise taxation. Its hoardings argued against the Labour party's tax policies. Yet look what the country is having to suffer as a result cif the mismanagement of the economy by these Ministers and all their guilty colleagues.
We have failed—[Interruption.]

Mr. Deputy Speaker: Order. For the last two minutes it might be wise for the House to settle down.

Mr. Hague: To help the hon. Gentleman through the last two minutes, may I suggest that he spends them by informing the House how the Labour party proposes to meet the shortfall in the national insurance fund?

Mr. Bradley: Is not it incredible that when Britain is faced with the biggest tax hike ever, amounting to £9 a week for the average family this year and £16 next year, the Government can ask only what we would do? The Government are responsible for what is happening. The Minister and all his right hon. and hon. Friends are the guilty men whom we have exposed during the past two days. We may not have won a vote in those two days, but I am assured that we have won the hearts and minds of the British people who know only too well where the guilt lies for the economic consequences.

It being six hours after the commencement of proceedings on Second Reading, MR. DEPUTY SPEAKER put the Question already proposed from the Chair, pursuant to Order [14 December]:—

The House divided: Ayes 303, Noes 256.

Division No. 56]
[11.10 pm


AYES


Ainsworth, Peter (East Surrey)
Ancram, Michael


Alexander, Richard
Arbuthnot, James


Alison, Rt Hon Michael (Selby)
Arnold, Jacques (Gravesham)


Allason, Rupert (Torbay)
Arnold, Sir Thomas (Hazel Grv)


Amess, David
Ashby, David





Aspinwall, Jack
Fabricant, Michael


Atkinson, David (Bour'mouth E)
Fairbairn, Sir Nicholas


Atkinson, Peter (Hexham)
Fenner, Dame Peggy


Baker, Rt Hon K. (Mole Valley)
Field, Barry (Isle of Wight)


Baker, Nicholas (Dorset North)
Fishburn, Dudley


Baldry, Tony
Forman, Nigel


Banks, Matthew (Southport)
Forsyth, Michael (Stirling)


Banks, Robert (Harrogate)
Fox, Dr Liam (Woodspring)


Bates, Michael
Fox, Sir Marcus (Shipley)


Batiste, Spencer
Freeman, Rt Hon Roger


Bellingham, Henry
French, Douglas


Bendall, Vivian
Fry, Peter


Beresford, Sir Paul
Gale, Roger


Biffen, Rt Hon John
Gallie, Phil


Blackburn, Dr John G.
Gardiner, Sir George


Bonsor, Sir Nicholas
Garel-Jones, Rt Hon Tristan


Booth, Hartley
Garnier, Edward


Boswell, Tim
Gill, Christopher


Bottomley, Peter (Eltham)
Gill, Christopher


Bottomley, Rt Hon Virginia
Goodlad, Rt Hon Alastair


Bowls, John
Goodson-Wickes, Dr Charles


Boyson, Rt Hon Sir Rhodes
Gorman, Mrs Teresa


Brandreth, Gyles
Gorst, John


Brazier, Julian
Grant, Sir A. (Cambs SW)


Bright, Graham
Greenway, Harry (Ealing N)


Brooke, Rt Hon Peter
Greenway, John (Ryedale)


Brown, M. (Brigg & Cl'thorpes)
Griffiths, Peter (Portsmouth, N)


Browning, Mrs. Angela
Grylls, Sir Michael


Bruce, Ian (S Dorset)
Gummer, Rt Hon John Selwyn


Burns, Simon
Hague, William


Burt, Alistair
Hamilton, Rt Hon Archie (Epsom)


Butcher, John
Hampson, Dr Keith


Butler, Peter
Hannam, Sir John


Butterfill, John
Hargreaves, Andrew


Carlisle, John (Luton North)
Harris, David


Carlisle, Kenneth (Lincoln)
Haselhurst, Alan


Carrington, Matthew
Hawkins, Nick


Carttiss, Michael
Hawksley, Warren


Cash, William
Hayes, Jerry


Channon, Rt Hon Paul
Heald, Oliver


Chapman, Sydney
Heathcoat-Amory, David


Churchill, Mr
Hendry, Charles


Clappison, James
Higgins, Rt Hon Sir Terence L.


Clark, Dr Michael (Rochford)
Hill, James (Southampton Test)


Clifton-Brown, Geoffrey
Hogg, Rt Hon Douglas (G'tham)


Coe, Sebastian
Horam, John


Colvin, Michael
Hordern, Rt Hon Sir Peter


Congdon, David
Howard, Rt Hon Michael


Conway, Derek
Howarth, Alan (Strat'rd-on-A)


Coombs, Anthony (Wyre For'st)
Howell, Rt Hon David (G'dford)


Coombs, Simon (Swindon)
Hughes Robert G. (Harrow W)


Cope, Rt Hon Sir John
Hunt, Rt Hon David (Wirral W)


Cormack, Patrick
Hunt, Sir John (Ravensbourne)


Couchman, James
Hunter, Andrew


Cran, James
Hund, Rt Hon Douglas


Currie, Mrs Edwina (S D'by'ire)
Jack, Michael


Curry, David (Skipton & Ripon)
Jackson, Robert (Wantage)


Davies, Quentin (Stamford)
Jenkin, Bernard


Davis, David (Boothferry)
Jessel, Toby


Day, Stephen
Johnson Smith, Sir Geoffrey


Deva, Nirj Joseph
Jones, Gwilym (Cardiff N)


Devlin, Tim
Jones, Robert B. (W Hertfdshr)


Dicks, Terry
Jopling, Rt Hon Michael


Dorrell, Stephen
Kellett-Bowman, Dame Elaine


Douglas-Hamilton, Lord James
Key, Robert


Dover, Den
Kilfedder, Sir James


Duncan, Alan
King, Rt Hon Tom


Duncan-Smith, Iain
Knapman, Roger


Dunn, Bob
Knight, Mrs Angela (Erewash)


Durant, Sir Anthony
Knight, Greg (Derby N)


Dykes, Hugh
Knight, Dame Jill (Bir'm E'st'n)


Eggar, Tim
Knox, Sir David


Elletson, Harold
Kynoch, George (Kincardine)


Emery, Rt Hon Sir Peter
Lait, Mrs Jacqui


Evans, David (Welwyn Hatfield)
Lamont, Rt Hon Norman


Evans, Jonathan (Brecon)
Lang, Rt Hon Ian


Evans, Nigel (Ribble Valley)
Lawrence, Sir Ivan


Evans, Roger (Monmouth)
Legg, Barry


Evennett, David
Leigh, Edward


Faber, David
Lennox-Boyd, Mark






Lester, Jim (Broxtowe)
Shaw, David (Dover)


Lidington, David
Shaw, Sir Giles (Pudsey)


Lightbown, David
Shepherd, Colin (Hereford)


Lilley, Rt Hon Peter
Shersby, Michael


Lloyd, Peter (Fareham)
Sims, Roger


Lord, Michael
Skeet, Sir Trevor


Luff, Peter
Smith, Sir Dudley (Warwick)


Lyell, Rt Hon Sir Nicholas
Smith, Tim (Beaconsfield)


MacGregor, Rt Hon John
Soames, Nicholas


MacKay, Andrew
Speed, Sir Keith


Maclean, David
Spencer, Sir Derek


McLoughlin, Patrick
Spicer, Sir James (W Dorset)


McNair-Wilson, Sir Patrick
Spicer, Michael (S Worcs)


Madel, David
Spink, Dr Robert


Maitland, Lady Olga
Spring, Richard


Malone, Gerald
Sproat, Iain


Mans, Keith
Squire, Robin (Hornchurch)


Marland, Paul
Stanley, Rt Hon Sir John


Marlow, Tony
Steen, Anthony


Marshall, John (Hendon S)
Stephen, Michael


Marshall, Sir Michael (Arundel)
Stern, Michael


Martin, David (Portsmouth S)
Stewart, Allan


Mates, Michael
Streeter, Gary


Mawhinney, Dr Brian
Sumberg, David


Merchant, Piers
Sweeney, Walter


Milligan, Stephen
Sykes, John


Mills, Iain
Tapsell, Sir Peter


Mitchell, Andrew (Gedling)
Taylor, John M. (Solihull)


Mitchell, Sir David (Hants NW)
Taylor, Sir Teddy (Southend, E)


Moate, Sir Roger
Temple-Morris, Peter


Monro, Sir Hector
Thomason, Roy


Montgomery, Sir Fergus
Thompson, Sir Donald (C'er V)


Moss, Malcolm
Thompson, Patrick (Norwich N)


Needham, Richard
Thornton, Sir Malcolm


Nelson, Anthony
Thurnham, Peter


Neubert, Sir Michael
Townend, John (Bridlington)


Newton, Rt Hon Tony
Townsend, Cyril D. (Bexl'yh'th)


Nicholls, Patrick
Tracey, Richard


Nicholson, David (Taunton)
Tredinnick, David


Nicholson, Emma (Devon West)
Trend, Michael


Norris, Steve
Trotter, Neville


Onslow, Rt Hon Sir Cranley
Twinn, Dr Ian


Oppenheim, Phillip
Vaughan, Sir Gerard


Ottaway, Richard
Viggers, Peter


Page, Richard
Waldegrave, Rt Hon William


Paice, James
Walden, George


Patnick, Irvine
Walker, Bill (N Tayside)


Patten, Rt Hon John
Waller, Gary


Pattie, Rt Hon Sir Geoffrey
Ward, John


Pawsey, James
Wardle, Charles (Bexhill)


Peacock, Mrs Elizabeth
Waterson, Nigel


Pickles, Eric
Watts, John


Porter, Barry (Wirral S)
Wells, Bowen


Porter, David (Waveney)
Whitney, Ray


Portillo, Rt Hon Michael
Whittingdale, John


Powell, William (Corby)
Wiggin, Sir Jerry


Rathbone, Tim
Wilkinson, John


Redwood, Rt Hon John
Willetts, David


Renton, Rt Hon Tim
Wilshire, David


Riddick, Graham
Winterton, Mrs Ann (Congleton)


Robathan, Andrew
Winterton, Nicholas (Macc'f'ld)


Roberts, Rt Hon Sir Wyn
Wolfson, Mark


Robertson, Raymond (Ab'd'n S)
Yeo, Tim


Robinson, Mark (Somerton)
Young, Rt Hon Sir George


Roe, Mrs Marion (Broxbourne)



Rumbold, Rt Hon Dame Angela
Tellers for the Ayes:


Ryder, Rt Hon Richard
Mr. Timothy Wood and


Sackville, Tom
Mr. Timothy Kirkhope.


Scott, Rt Hon Nicholas





NOES


Abbott, Ms Diane
Austin-Walker, John


Adams, Mrs Irene
Banks, Tony (Newham NW)


Ainger, Nick
Barnes, Harry


Ainsworth, Robert (Cov'try NE)
Barron, Kevin


Allen, Graham
Battle, John


Anderson, Donald (Swansea E)
Bayley, Hugh


Anderson, Ms Janet (Ros'dale)
Beckett, Rt Hon Margaret


Armstrong, Hilary
Bell, Stuart


Ashton, Joe
Benn, Rt Hon Tony





Bennett, Andrew F.
Grant, Bernie (Tottenham)


Benton, Joe
Griffiths, Nigel (Edinburgh S)


Bermingham, Gerald
Griffiths, Win (Bridgend)


Berry, Dr. Roger
Grocott, Bruce


Betts, Clive
Gunnell, John


Blair, Tony
Hain, Peter


Blunkett, David
Hall, Mike


Boateng, Paul
Hanson, David


Boyes, Roland
Hardy, Peter


Bradley, Keith
Harman, Ms Harriet


Bray, Dr Jeremy
Hattersley, Rt Hon Roy


Brown, Gordon (Dunfermline E)
Henderson, Doug


Brown, N. (N'c'tle upon Tyne E)
Heppell, John


Bruce, Malcolm (Gordon)
Hill, Keith (Streatham)


Burden, Richard
Hinchliffe, David


Byers, Stephen
Hoey, Kate


Caborn, Richard
Hogg, Norman (Cumbernauld)


Callaghan, Jim
Home Robertson, John


Campbell, Mrs Anne (C'bridge)
Hood, Jimmy


Campbell, Menzies (Fife NE)
Hoon, Geoffrey


Campbell, Ronnie (Blyth V)
Howarth, George (Knowsley N)


Canavan, Dennis
Howells, Dr. Kim (Pontypridd)


Cann, Jamie
Hoyle, Doug


Chisholm, Malcolm
Hughes, Kevin (Doncaster N)


Clapham, Michael
Hugher, Robert (Aberdeen N)


Clark, Dr David (South Shields)
Hughes, Roy (Newport E)


Clarke, Eric (Midlothian)
Hutton, John


Clarke, Tom (Monklands W)
Ingram, Adam


Clelland, David
Jackson, Glenda (H'stead)


Clwyd, Mrs Ann
Jackson, Helen (Shef'ld, H)


Coffey, Ann
Jamieson, David


Cohen, Harry
Janner, Greville


Connarty, Michael
Johnston, Sir Russell


Cook, Frank (Stockton N)
Jones, Barry (Alyn and D'side)


Corbett, Robin
Jones, Jon Owen (Cardiff C)


Corbyn, Jeremy
Jones, Lynne (B'ham S O)


Corston, Ms Jean
Jones, Martyn (Clwyd, SW)


Cousins, Jim
Jowell, Tessa


Cox, Tom
Kaufman, Rt Hon Gerald


Cryer, Bob
Keen, Alan


Cummings, John
Kennedy, Jane (Lpool Brdgn)


Cunliffe, Lawrence
Khabra, Piara S.


Cunningham, Jim (Covy SE)
Kilfoyle, Peter


Cunningham, Rt Hon Dr John
Kinnock, Rt Hon Neil (Islwyn)


Darling, Alistair
Kirkwood, Archy


Davidson, Ian
Leighton, Ron


Davies, Bryan (Oldham C'tral)
Lestor, Joan (Eccles)


Davies, Rt Hon Denzil (Llanelli)
Lewis, Terry


Davies, Ron (Caerphilly)
Litherland, Robert


Davis, Terry (B'ham, H'dge H'I)
Livingstone, Ken


Denham, John
Lloyd, Tony (Stretford)


Dewar, Donald
Llwyd, Elfyn


Dixon, Don
Loyden, Eddie


Dobson, Frank
Lynne, Ms Liz


Donohoe, Brian H.
McAllion, John


Dowd, Jim
McAvoy, Thomas


Dunnachie, Jimmy
Macdonald, Calum


Dunwoody, Mrs Gwyneth
McFall, John


Eagle, Ms Angela
McKelvey, William


Eastham, Ken
Mackinlay, Andrew


Enright, Derek
McLeish, Henry


Etherington, Bill
McMaster, Gordon


Evans, John (St Helens N)
McNamara, Kevin


Fatchett, Derek
McWilliam, John


Faulds, Andrew
Madden, Max


Field, Frank (Birkenhead)
Mahon, Alice


Fisher, Mark
Mandelson, Peter


Flynn, Paul
Marshall, David (Shettleston)


Foster, Rt Hon Derek
Marshall, Jim (Leicester, S)


Foulkes, George
Martlew, Eric


Fraser, John
Maxton, John


Fyfe, Maria
Meacher, Michael


Gapes, Mike
Meale, Alan


Garrett, John
Michael, Alun


George, Bruce
Michie, Bill (Sheffield Heeley)


Gerrard, Neil
Milburn, Alan


Gilbert, Rt Hon Dr John
Miller, Andrew


Godman, Dr Norman A.
Moonie, Dr Lewis


Golding, Mrs Llin
Morgan, Rhodri


Graham, Thomas
Morris, Rt Hon A. (Wy'nshawe)






Morris, Estelle (B'ham Yardley)
Simpson, Alan


Morris, Rt Hon J. (Aberavon)
Skinner, Dennis


Mowlam, Marjorie
Smith, Andrew (Oxford E)


Mudie, George
Smith, C. (Isl'ton S & F'sbury)


Mullin, Chris
Smith, Rt Hon John (M'kl'ds E)


Murphy, Paul
Smith, Llew (Blaenau Gwent)


Oakes, Rt Hon Gordon
Snape, Peter


O'Brien, Michael (N W'kshire)
Soley, Clive


O'Hara, Edward
Spearing, Nigel


Olner, William
Spellar, John


O'Neill, Martin
Squire, Rachel (Dunfermline W)


Orme, Rt Hon Stanley
Steinberg, Gerry


Patchett, Terry
Stevenson, George


Pendry, Tom
Stott, Roger


Pickthall, Colin
Straw, Jack


Pike, Peter L.
Taylor, Mrs Ann (Dewsbury)


Pope, Greg
Taylor, Rt Hon John D. (Strgfd)


Powell, Ray (Ogmore)
Tipping, Paddy


Prentice, Ms Bridget (Lew'm E)
Turner, Dennis


Prentice, Gordon (Pendle)
Walker, Rt Hon Sir Harold


Prescott, John
Wallace, James


Primarolo, Dawn
Walley, Joan


Purchase, Ken
Wardell, Gareth (Gower)


Quin, Ms Joyce
Wareing, Robert N


Radice, Giles
Watson, Mike


Randall, Stuart
Welsh, Andrew


Raynsford, Nick
Wicks, Malcolm


Reid, Dr John
Wigley, Dafydd


Rendel, David
Williams, Rt Hon Alan (Sw'n W)


Robertson, George (Hamilton)
Williams, Alan W (Carmarthen)


Robinson, Geoffrey (Co'try NW)
Wilson, Brian


Roche, Mrs. Barbara
Winnick, David


Rogers, Allan
Wise, Audrey


Rooney, Terry
Worthington, Tony


Ross, Ernie (Dundee W)
Wray, Jimmy


Rowlands, Ted
Wright, Dr Tony


Ruddock, Joan
Young, David (Bolton SE)


Salmond, Alex



Sedgemore, Brian
Tellers for the Noes:


Sheldon, Rt Hon Robert
Mr. Jack Thompson and


Short, Clare
Mr. Eric Illsley.

Question accordingly agreed to.

Bill read the Third time, and passed.

EUROPEAN COMMUNITY DOCUMENTS

Motion made, and Question put forthwith pursuant to Standing Order No. 102(9) (European Standing Committees).

OWN RESOURCES

That this House takes note of European Community Document No. 9298/93 + COR 1, relating to the Communities' own resources: and endorses the Government's objective of ensuring that the new Own Resources Decision is in accordance with the financing decisions taken by the Edinburgh European Council of 11th and 12th December 1992.—[Mr. Robert G. Hughes.]

The House divided: Ayes 282, Noes 145.

Division No. 57]
[11.24 pm


AYES


Ainsworth, Peter (East Surrey)
Banks, Robert (Harrogate)


Alexander, Richard
Bates, Michael


Alison, Rt Hon Michael (Selby)
Batiste, Spencer


Allason, Rupert (Torbay)
Bellingham, Henry


Amess, David
Bendall, Vivian


Ancram, Michael
Beresford, Sir Paul


Arbuthnot, James
Blackburn, Dr John G.


Arnold, Jacques (Gravesham)
Bonsor, Sir Nicholas


Arnold, Sir Thomas (Hazel Grv)
Booth, Hartley


Ashby, David
Boswell, Tim


Aspinwall, Jack
Bottomley, Peter (Eltham)


Atkinson, David (Bour'mouth E)
Bottomley, Rt Hon Virginia


Atkinson, Peter (Hexham)
Bowis, John


Baker, Rt Hon K. (Mole Valley)
Brandreth, Gyles


Baker, Nicholas (Dorset North)
Brazier, Julian


Baldry, Tony
Bright, Graham


Banks, Matthew (Southport)
Brooke, Rt Hon Peter





Brown, M. (Brigg & Cl'thorpes)
Hannam, Sir John


Browning, Mrs. Angela
Hargreaves, Andrew


Bruce, Ian (S Dorset)
Haselhurst, Alan


Bruce, Malcolm (Gordon)
Hawkins, Nick


Burns, Simon
Hayes, Jerry


Burt, Alistair
Heald, Oliver


Butcher, John
Heathcoat-Amory, David


Butler, Peter
Hendry, Charles


Butterfill, John
Hill, James (Southampton Test)


Campbell, Menzies (Fife NE)
Hogg, Rt Hon Douglas (G'tham)


Carlisle, Kenneth (Lincoln)
Horam, John


Carrington, Matthew
Hordern, Rt Hon Sir Peter


Carttiss, Michael
Howard, Rt Hon Michael


Channon, Rt Hon Paul
Howarth, Alan (Strat'rd-on-A)


Chapman, Sydney
Howell, Rt Hon David (G'dford)


Churchill, Mr
Hunt, Rt Hon David (Wirral W)


Clappison, James
Hunter, Andrew


Clarke, Rt Hon Kenneth (Ruclif)
Hurd, Rt Hon Douglas


Clifton-Brown, Geoffrey
Jack, Michael


Coe, Sebastian
Jackson, Robert (Wantage)


Congdon, David
Jenkin, Bernard


Conway, Derek
Jessel, Toby


Coombs, Anthony (Wyre For'st)
Johnson Smith, Sir Geoffrey


Coombs, Simon (Swindon)
Johnston, Sir Russell


Cope, Rt Hon Sir John
Jones, Gwilym (Cardiff N)


Cran, James
Jones, Robert B. (W Hertfdshr)


Currie, Mrs Edwina (S D'by'ire)
Jopling, Rt Hon Michael


Curry, David (Skipton & Ripon)
Key, Robert


Davies, Quentin (Stamford)
Kilfedder, Sir James


Davis, David (Boothferry)
King, Rt Hon Tom


Day, Stephen
Kirkwood, Archy


Deva, Nirj Joseph
Knight, Mrs Angela (Erewash)


Devlin, Tim
Knight, Greg (Derby N)


Dicks, Terry
Knight, Dame Jill (Bir'm E'st'n)


Dorrell, Stephen
Knox, Sir David


Douglas-Hamilton, Lord James
Kynoch, George (Kincardine)


Dover, Den
Lait, Mrs Jacqui


Duncan, Alan
Lamont, Rt Hon Norman


Duncan-Smith, Iain
Lang, Rt Hon Ian


Dunn, Bob
Lawrence, Sir Ivan


Durant, Sir Anthony
Legg, Barry


Dykes, Hugh
Leigh, Edward


Eggar, Tim
Lennox-Boyd, Mark


Elletson, Harold
Lester, Jim (Broxtowe)


Emery, Rt Hon Sir Peter
Lidington, David


Evans, David (Welwyn Hatfield)
Lightbown, David


Evans, Jonathan (Brecon)
Lilley, Rt Hon Peter


Evans, Nigel (Ribble Valley)
Lloyd, Peter (Fareham)


Evans, Roger (Monmouth)
Lord, Michael


Evennett, David
Luff, Peter


Faber, David
Lyell, Rt Hon Sir Nicholas


Fabricant, Michael
Lynne, Ms Liz


Fairbairn, Sir Nicholas
MacGregor, Rt Hon John


Field, Barry (Isle of Wight)
MacKay, Andrew


Fishburn, Dudley
Maclean, David


Forman, Nigel
McLoughlin, Patrick


Forsyth, Michael (Stirling)
Madel, David


Fox, Dr Liam (Woodspring)
Maitland, Lady Olga


Fox, Sir Marcus (Shipley)
Malone, Gerald


Freeman, Rt Hon Roger
Mans, Keith


French, Douglas
Marland, Paul


Fry, Peter
Marshall, John (Hendon S)


Gale, Roger
Marshall, Sir Michael (Arundel)


Gallie, Phil
Martin, David (Portsmouth S)


Gardiner, Sir George
Mates, Michael


Garel-Jones, Rt Hon Tristan
Mawhinney, Dr Brian


Garnier, Edward
Merchant, Piers


Gillan, Cheryl
Milligan, Stephen


Goodlad, Rt Hon Alastair
Mitchell, Andrew (Gedling)


Goodson-Wickes, Dr Charles
Mitchell, Sir David (Hants NW)


Gorst, John
Moate, Sir Roger


Grant, Sir A. (Cambs SW)
Monro, Sir Hector


Greenway, Harry (Ealing N)
Montgomery, Sir Fergus


Greenway, John (Ryedale)
Needham, Richard


Griffiths, Peter (Portsmouth, N)
Nelson, Anthony


Grylls, Sir Michael
Neubert, Sir Michael


Gummer, Rt Hon John Selwyn
Newton, Rt Hon Tony


Hague, William
Nicholls, Patrick


Hamilton, Rt Hon Archie (Epsom)
Nicholson, David (Taunton)


Hampson, Dr Keith
Nicholson, Emma (Devon West)






Norris, Steve
Steen, Anthony


Oppenheim, Phillip
Stephen, Michael


Ottaway, Richard
Stern, Michael


Page, Richard
Stewart, Allan


Paice, James
Streeter, Gary


Patnick, Irvine
Sumberg, David


Patten, Rt Hon John
Sweeney, Walter


Pattie, Rt Hon Sir Geoffrey
Sykes, John


Pawsey, James
Tapsell, Sir Peter


Peacock, Mrs Elizabeth
Taylor, John M. (Solihull)


Pickles, Eric
Temple-Morris, Peter


Portillo, Rt Hon Michael
Thomason, Roy


Powell, William (Corby)
Thompson, Sir Donald (C'er V)


Rathbone, Tim
Thompson, Patrick (Norwich N)


Redwood, Rt Hon John
Thornton, Sir Malcolm


Rendel, David
Thurnham, Peter


Renton, Rt Hon Tim
Townend, John (Bridlington)


Richards, Rod
Townsend, Cyril D. (Bexl'yh'th)


Riddick, Graham
Tracey, Richard


Robathan, Andrew
Tredinnick, David


Roberts, Rt Hon Sir Wyn
Trend, Michael


Robertson, Raymond (Ab'd'n S)
Trotter, Neville


Robinson, Mark (Somerton)
Twinn, Dr Ian


Roe, Mrs Marion (Broxbourne)
Vaughan, Sir Gerard


Rowe, Andrew (Mid Kent)
Viggers, Peter


Rumbold, Rt Hon Dame Angela
Waldegrave, Rt Hon William


Ryder, Rt Hon Richard
Walden, George


Sackville, Tom
Walker, Bill (N Tayside)


Scott, Rt Hon Nicholas
Wallace, James


Shaw, David (Dover)
Waller, Gary


Shaw, Sir Giles (Pudsey)
Ward, John


Shepherd, Colin (Hereford)
Wardle, Charles (Bexhill)


Shersby, Michael
Waterson, Nigel


Sims, Roger
Watts, John


Smith, Sir Dudley (Warwick)
Wells, Bowen


Smith, Tim (Beaconsfield)
Whitney, Ray


Soames, Nicholas
Whittingdale, John


Speed, Sir Keith
Wiggin, Sir Jerry


Spencer, Sir Derek
Willetts, David


Spicer, Sir James (W Dorset)
Wolfson, Mark


Spicer, Michael (S Worcs)
Yeo, Tim


Spink, Dr Robert
Young, Rt Hon Sir George


Spring, Richard



Sproat, Iain
Tellers for the Ayes:


Squire, Robin (Hornchurch)
Mr. Timothy Wood and


Stanley, Rt Hon Sir John
Mr. Timothy Kirkwood.




NOES


Abbott, Ms Diane
Boateng, Paul


Adams, Mrs Irene
Bradley, Keith


Ainsworth, Robert (Cov'try NE)
Bray, Dr Jeremy


Anderson, Donald (Swansea E)
Brown, Gordon (Dunfermline E)


Armstrong, Hilary
Brown, N. (N'c'tle Upon Tyne E)


Austin-Walker, John
Byers, Stephen


Banks, Tony (Newham NW)
Callaghan, Jim


Barnes, Harry
Cann, Jamie


Battle, John
Chisholm, Malcolm


Bayley, Hugh
Clapham, Michael


Beckett, Rt Hon Margaret
Clark, Dr David (South Shields)


Bell, Stuart
Clarke, Tom (Monklands W)


Benton, Joe
Clelland, David


Betts, Clive
Clwyd, Mrs Ann


Blunkett, David
Coffey, Ann





Cohen, Harry
Martlew, Eric


Connarty, Michael
Maxton, John


Corbyn, Jeremy
Meale, Alan


Corston, Ms Jean
Michael, Alun


Cox, Tom
Michie, Bill (Sheffield Heeley)


Cryer, Bob
Miller, Andrew


Cunliffe, Lawrence
Moonie, Dr Lewis


Cunningham, Jim (Covy SE)
Morgan, Rhodri


Cunningham, Rt Hon Dr John
Morris, Rt Hon A. (Wy'nshawe)


Darling, Alistair
Mullin, Chris


Davidson, Ian
O'Brien, Michael (N W'kshire)


Davies, Ron (Caerphilly)
O'Hara, Edward


Davis, Terry (B'ham, H'dge H'l)
Olner, William


Dixon, Don
O'Neill, Martin


Donohoe, Brian H.
 Patchett, Terry


Dowd, Jim
Pickthall, Colin


Eastham, Ken
Pike, Peter L.


Etherington, Bill
Pope, Greg


Evans, John (St Helens N)
Powell, Ray (Ogmore)


Flynn, Paul
Prentice, Ms Bridget (Lew'm E)


Foster, Rt Hon Derek
Prentice, Gordon (Pendle)


Gapes, Mike
Prescott, John


Garrett, John
Purchase, Ken


Godman, Dr Norman A.
Quin, Ma Joyce


Grant, Bernie (Tottenham)
Radice, Giles


Gunnell, John
Raynsford, Nick


Hall, Mike
Reid, Dr John


Hanson, David
Robertson, George (Hamilton)


Henderson, Doug
Roche, Mrs. Barbara


Heppell, John
Rogers, Allan


Hill, Keith (Streatham)
Rooney, Terry


Hinchliffe, David
Ruddock, Joan


Hoey, Kate
Salmond, Alex


Hogg, Norman (Cumbernauld)
Sedgemore, Brian


Hood, Jimmy
Simpson, Alan


Howarth, George (Knowsley N)
Skinner, Dennis


Hoyle, Doug
Smith, Andrew (Oxford E)


Hughes, Kevin (Doncaster N)
Smith, C. (Isl'ton S & F'sbury)


Illsley, Eric
Smith, Llew (Blaenau Gwent)


Jackson, Helen (Shef'ld, H)
Spearing, Nigel


Jones, Lynne (B'ham S O)
Spellar, John


Jones, Martyn (Clwyd, SW)
Steinberg, Gerry


Kaufman, Rt Hon Gerald
Stott, Roger


Keen, Alan
Taylor, Mrs Ann (Dewsbury)


Leighton, Ron
Taylor, Rt Hon John D. (Strgfd)


Lewis, Terry
Thompson, Jack (Wansbeck)


Livingstone, Ken
Tipping, Paddy


Lloyd, Tony (Stretford)
Turner, Dennis


Llwyd, Elfyn
Walker, Rt Hon Sir Harold


Lynne, Ms Liz
Walley, Joan


McAllion, John
Watson, Mike


McAvoy, Thomas
Wicks, Malcolm


Macdonald, Calum
Wigley, Dafydd


McFall, John
Wise, Audrey


Mackinlay, Andrew
Worthington, Tony


McWilliam, John



Mahon, Alice
Tellers for the Noes:


Mendelson, Peter
Mr. Gordon McMaster and


Marshall, David (Shettleston)
Mr. Derek Enright.


Marshall, Jim (Leicester, S)

Question accordingly agreed to.

Orders of the Day — Television Violence

Motion made, and Question proposed, That this House do now adjourn—[Mr. Robert G. Hughes.]

Ms Liz Lynne: I am delighted to have the opportunity to debate a very important matter—the effect of violence shown on television, films and video on the behaviour of children.
We all know of the recent tragic case of James Bulger, and I believe that all hon. Members on both sides of the House were deeply distressed by it. When I heard reports of the trial and read some of the transcript, and found out that one of the young boys who had committed the murder had been watching a video called "Child's Play 3", I was absolutely horrified. The fact that a child that age was allowed to watch a video with that sort of content is cause for all of us to be gravely concerned.
It is also cause for grave concern that 181,000 children watched the same film on BSkyB, of whom 42,000 were under the age of nine. I feel strongly that it should not have been broadcast; but I also feel that the children's parents should not have allowed them to watch it. There must be parental responsibility. I cannot say much about the Suzanne Capper trial, except that the alleged perpetrators were apparently chanting the tune from the same film.
I believe that a royal commission should be set up to discover the causes of violence. I know that the Archbishop of Westminster and the Chief Rabbi have called for one, and my hon. Friend the Member for Liverpool, Mossley Hill (Mr. Alton) has tabled an early-day motion which was signed by 100 hon. Members, including me. However, we have not managed to bring about the setting up of such a commission.
I do not believe that a matter such as this is or should be party political. Hon. Members of all parties are deeply concerned about the level of violence in today's society. We must establish why those children committed that crime—and, indeed, why there is so much violence in society nowadays. It is all very well to cite poverty and poor living conditions; although they may contribute to the problem, I genuinely believe that children especially are desensitised by the diet of violence that they are fed by television, films and videos, day after day, as they sit in front of their television sets.
The majority of parents are very responsible, but many are not. Instead of entertaining their children—taking them out and spending time with them—they much prefer to go to the video shop. Quite often, they do not check the content of the videos that they take out before sitting their children down in front of the television. Those children become more and more used to violence; the more they see, the more they feel that that is the normal way in which to behave. If they cannot get something by means of reason, they will hit out.
Some say that there is no link between the violence on television and the violence in society—that there is no proof. That is why I believe that more research is needed. The public, however, do believe that there is a link. A recent TV Times survey found that 59 per cent. of viewers thought there was a link between television violence and violence in society, while 85 per cent. felt that television companies were not careful enough about what

they screened. Even the Broadcasting Standards Commission said that complaints had trebled in the 12 months before last July.
I know that television films and videos have changed a great deal in those 12 months, but they changed even more in the years before that. That is one of the main problems. Films, television shows and videos have become more and more realistic. When I was younger I used to watch "Dixon of Dock Green". It was a crime series, but we never saw the violence that we see today. There was not the realism that we see today. The same applied to popular children's programmes such as "Popeye". There was always a moral, Popeye always won through. That may be simplifying matters, but there was a moral and the goodie always won. Today, I do not believe that the goodie does win. We must ensure that we have a certain morality running through television, films and video.
It is a tribute to the directors, producers, writers and actors that there is more realism today. It is no longer like "Dr. Who" or cowboys and indians. Many people who do not believe that there is a link say, "I grew up with cowboys and indians and it did not harm me." Children do not see cowboys, red indians or daleks in the street every day. That is the difference. What they see on their screens today is something that they know. They see a real person who could be their neighbour, the man down the street or a child who they know, committing acts of violence.
Many years ago when I worked with children, I asked them about violence and television. I did not ask them whether it had any influence on their behaviour, but I asked them whether they were terrified by violence. Incredibly, they proved the theory. I asked about "Dr. Who". They said, "That is fantasy. I have never met a dalek. I do not have nightmares about that." Most of them had nightmares about real-life drama, things with which they could identify.
There are many television shows, films and videos that are not as extreme as those watched by the children in the James Bulger case. Some films appear to be totally innocuous. I went to see "Home Alone 2". It was the first film that I had been to see in about a year. I had an evening off and that was the only cinema in which I could get a seat. I went with some friends who have children, one of whom is seven years old. She did not come with us, but I asked her parents later whether they would have let her come to the film. They said, "Yes, of course. What about all the other children there?"
In the film, a little boy went to the top of a building and started hurling bricks on to the villain. He was knocked out, but got up after 30 seconds. Another brick came down on top of him and he again got up. He then went into a building and was electrocuted. His hair stood on end and he went black all over. He survived everything. We did not see the real effect of the violence.
Children as young as four and five were watching that film. I do not think that they would have wanted to be violent or that it would necessarily have affected them in a violent way. However, films that do not show the consequences of violence are just as bad. Children will ape what they see on a television screen or in a film. They may go out and think, "I'll throw a brick at another child. It won't harm him. I saw it in a film and the person got up." I am not saying that we should ban such films, but we should ensure that their producers and writers look carefully at the sort of programmes that they are making.
Some time ago I watched "Kilroy" because it was specifically about television and violence. There were two prisoners on day release from prison. One of them was asked, "Why did you commit your crime?" He said, "I saw it on Crimewatch. I saw someone go into a building society, steal the money and get away with it and I thought, 'I'm broke and that's an easy way to make money. He was caught. How many people watch those sorts of programmes? I am not saying that we should ban them, but programme makers must be responsible.
I am very worried about real-life crime and its effect on children as well. Many of them see it, as many programmes now depict and dramatise what has happened in real life. Again, I think that that is a worrying way to go about things.
There has to be a link between crime and video nasties and all the violence that we see in the media. If there was not a link and people did not feel that television influenced them, why would advertisers spend £1·7 billion a year on advertising their products? They cannot say, on the one hand, that it influences people who watch television and, on the other, that it does not. It either does or it does not.
We must ask ourselves what we should do about it. As I said, I feel that we need a royal commission to consider why people, especially children, are violent. I would like there to be a new classification, "Not suitable for home entertainment", on videos so that when parents go into shops they know that they cannot show them to their children. I want broadcasters to mark programmes with a "V" for violence. Perhaps that is a step in the right direction. We will not be able to get them to change overnight, but we might be able to persuade them to do so gradually.
How do we make parents responsible? How do we teach them to teach their children the difference between fact and fiction? We must study that seriously.
The BBC guidelines already state that a blow to the head must be treated as a serious matter. I want television companies to monitor whether those guidelines are working in practice. I suspect that they are not. They read very well, but from watching some programmes, I do not feel that some companies are following their own guidelines.
I would like actors, writers, directors and producers, along with politicians, to come together into some form of organisation to try to change the way in which people think and the programmes that are made. Writers could write programmes and plays with a far more positive message and we could get away from the climate of violence.
I congratulate Sir Anthony Hopkins, who, when asked to make a sequel to "The Silence of the Lambs", refused because he suddenly realised what sort of effect the first film had had on people, and Stanley Kubrik, who abandoned "A Clockwork Orange" because a tramp was beaten up after its first screening.
People in the profession need to be mobilised and politicians on both sides of the House must mobilise with people in the industry and ensure that we do something to stop the diet of violence.
If negative images influence people, positive images must, too. We must persuade programme makers to put positive images on our screens. Most importantly, we must all treat the matter seriously. I know that hon. Members in

the House tonight do so and that they are here because they know that violence has got totally out of control and that something has to be done. I sincerely hope that we will be able to set up a royal commission.

The Minister of State, Home Office (Mr. David Maclean): I congratulate the hon. Member for Rochdale (Ms Lynne) on obtaining this debate and raising this important issue. She is right. As she will know, it is unusual to have more than just a few hon. Members in the House for an Adjournment debate, but she is supported by her hon. Friend the Member for Cheltenham (Mr. Jones) and I see my hon. Friends the Members for Langaurgh (Mr. Bates, for Mid-Staffordshire (Mr. Fabricant), for Gravesham (Mr. Arnold), for Dover (Mr. Shaw) and for Chichester (Mr. Nelson) as well. I think that it was quite unique that, as the hon. Lady was talking, all around me I could hear murmurs of, "Yes, I agree with that", "She's absolutely right" and "She has hit the nail on the head" in response to so many of her arguments.
Of course, the debate has understandably attained particular prominence following the judge's remarks in the case arising from the tragic death of James Bulger. The whole House will be grateful to the hon. Member for Rochdale for her work, in association with my hon. Friend the Member for Congleton (Mrs. Winterton) and others, in helping to draw attention to the challenge presented to society by the worst violent and pornographic material. In particular this evening, she has drawn attention to the paramount importance of protecting children from harmful influences.
My right hon. and learned Friend the Home Secretary has already made clear the Government's great concern about the murder of James Bulger and has expressed the sympathy that the whole House must feel for James's parents. I am sure that the House would like to take this opportunity to congratulate them on the birth of their new son, although of course nothing can make up for the son they have lost.
The murder of a child is always an appalling crime, whatever the circumstances. Nevertheless, it comes as no surprise that the James Bulger case has provoked such great concern, given the involvement of children both as perpetrators and as victim. Thankfully, murder carried out by young children is extremely rare. It may, therefore, be unsafe to draw any wider conclusions from that particular case.
Nevertheless, my right hon. and learned Friend and I have noted the remarks made by the trial judge, Mr. Justice Morland, who suggested that one explanation for the murder might be exposure to violent videos. We are currently studying these remarks, together with the views of the police officers who investigated the case. We shall also examine the results of current research into the viewing behaviour of juvenile offenders, which has been commissioned jointly by the British Board of Film Classification, the Broadcasting Standards Council, the BBC and the Independent Television Commission. The results of that research are expected to be published in the new year.
Of course, there has already been extensive research into the possibility of a link between on-screen violence and violent behaviour. Many hon. Members will have seen the reports in the press only yesterday about a new study


which suggests that the playing of violent computer games encourages aggression in about one in five of the children who play them.
The balance of the research undertaken so far has failed to produce satisfactory evidence that a direct causal effect exists between exposure to violent material and the commission of violent crime. There are probably insuperable practical limitations to what it is possible for such research to achieve in investigating the causes of human behaviour.
None the less, we shall all accept that films, videos, television and computer games are powerful media. Simple common sense tells us that they must have some effect on at least part of their audience. I look at it this way: last year in the United Kingdom, our two commercial terrestrial channels alone generated some £1·7 billion in advertising revenue. Is it likely that advertisers—hard-faced capitalists —would be prepared to spend such vast sums if they did not believe that television could have some influence on people's choices or form their opinions? Of course it does. The Government therefore take the view that all broadcasters, film-makers and video games manufacturers should exercise due caution and assume that there may be some relationship between what they do and the way in which some people behave.
Following the murder of James Bulger there have been calls for the Government to take tough action to ban video nasties, violent videos and computer games and violence on television. I can well understand the concern that has led to such pressure, but as my right hon. and learned Friend the Home Secretary has made clear, it would not be right for the Government to rush into snap judgments on the issue, particularly on the question of any wider implications for the criminal law. We need to consider it carefully.
The Government have considerable sympathy for those who say that there is too much violence in the media and that too often children are exposed to violent films or videos which can turn any child and which we would prefer them not to see.

Mr. Michael Stephen: Does my hon. Friend accept that it is a fallacy to suppose that we can protect children from watching violent material simply by screening it after 9 pm or any other hour? Does he agree that, whatever we do, if such material is broadcast young children will see it and, therefore, the only answer is to ban it altogether?

Mr. Maclean: I largely accept that argument. We all know that it is usually only young children who can work the latest video recorders. I do not know whether watching violent films or videos can turn any child or adult into a murderer. But, as I have said, I believe that violent and horrific material must have some effect on a susceptible minority. That is one reason why our controls on videos, films and broadcasting are already among the most stringent in the world.
I shall briefly describe those controls, but before I do, I shall remind the House that they form only part of a much wider system of regulation over what children watch and how they behave. Of course, I am referring to the exercise of parental responsibility, to which the hon. Lady so rightly and wisely referred. That is a much more effective means of controlling children's behaviour than any system of regulation the Government could hope to establish. There

is an obvious need for all of us who are responsible for children to ensure that they are not allowed to see unsuitable material. There is also a clear need for film makers, video producers and broadcasters to think very carefully about their wider responsibilities to society.
The Government recognise that there is considerable concern about the availability of violent and horrific videos, including video and computer games. The hon. Lady's comments about the difference between fantasy films and reality struck a chord with me and my hon. Friends. We can all watch films, including some of my favourites such as "Star Trek". They are wonderful escapism and I do not think that people realistically put themselves in that position.
I agree with the hon. Lady that some of the films which might—I say "might" because I do not have research to back this up, and I do not have research to prove I am wrong either—be the most dangerous do not appear to be the most obvious ones. I am referring to "The Termminator" and "Rambo". Those films may seem to be nice family videos, but the hon. Lady correctly said that there is a lot of violence and the baddies continue to gel up and appear completely uninjured. I would love to know the effect of that on the susceptible minority.
We must all remember that we are not so much worried about the 95 per cent. of people who can watch a violent film or any type of material and not be affected or be depraved or corrupted. The problem is the susceptible minority who might be depraved or corrupted. I digressed slightly because the hon. Lady made a very good point.
All of us know where we might draw the line on the sort of violent material that we would not like 18-year-olds, 15-year-olds, children or, indeed, other members of our family to see. The difficulty is that if we redraw the line on violence, how do we transcribe that into guidelines or language to give to broadcasters or video producers? That is a difficulty that I am addressing at present.
Despite those difficulties, our existing system of video censorship and classification is already one of the most rigorous in the world. Under the Video Recordings Act 1984, all video works, apart from a small category of innocuous exempt material, must be submitted to the British Board of Film Classification for classificiation. The BBFC is an independent body and Ministers have no power to control or review its classification decisions. Under the Act, it is a criminal offence to supply a video which has not been classified by the BBFC or to supply a video in breach of the age classification awarded. The maximum penalty for supplying an unclassified video is a £20,000 fine, and the maximum penalty for the offence of under-age supply is a £5,000 fine. The hon. Lady suggested that perhaps we could legislate to introduce a new category of films not suitable for viewing in the home, but that would be no different from the present system.
We already require the BBFC to follow certain guidelines when performing its statutory classification duties. It must take into account the fact that videos are seen in the home and may therefore need to be censored or classified more restrictively than video films because children may replay them and see the one piece of violence repeatedly, which they would not normally do in the cinema. The BBFC must also seek to avoid classifying any work which could be considered obscene or otherwise unlawful.
When classifying films for video, the BBFC scrutinises every work in its entirety and adopts an active editing


policy. It does not simply extend the same classification as was granted for cinema release, and frequently places films in a more restrictive age category, as well as requiring additional cuts of violent or explicit scenes which may be played over and over again in isolation and which are therefore unsuitable for viewing in the home, where access is not as strictly controlled as at a cinema. If the BBFC believes that a particular film is simply not suitable for home viewing in any circumstances, it will refuse video classification altogether.
We have already taken action to improve the enforcement of the 1984 Act. During the previous Session, we supported a Bill introduced by Lord Birkett—a vice-president of the BBFC—and in this House by my hon. Friend the Member for City of Chester (Mr. Brandreth), which extended the time limit for the commencement of prosecutions under the Act. It also streamlined the procedure by which the BBFC may give evidence as to whether a particular video work either has or has not been classified. That Bill came into force on 20 September.
We will be taking further action under the forthcoming Criminal Justice Bill to give local authority trading standards officers stronger powers to enforce the 1984 Act by enabling them to investigate an entire chain of video supplies which is outside their area. The Bill will also contain other provisions designed to strengthen the enforcement of our legal controls on obscene material and child pornography. They will create new police powers of search and seizure; a new power of arrest for obscenity and child pornography offences; increase the maximum penalty for the mere possession of child pornography and extend the law to cover simulated child pornography that is manufactured by computer, where a real child is the basis of the photograph. We will also consider carefully the report of the Select Committee on Home Affairs, which is currently inquiring into computer pornography.
Video and computer games constitute video recordings for the purposes of the 1984 Act, but most games are exempt from the classification requirement under the Act. However, such games forfeit their exemption if they depict, to any significant extent, human sexual activity, the mutilation or torture of or gross violence towards humans or animals, or human genital organs. Games of this nature must be submitted for classification in the usual way. Probably the most famous one is the Sega game, "Night Trap", which has already been classified as "15" because of its use of real actors. As technology advances and the number of video games using realistic footage of real actors increases, the number of games requiring classification and possibly censorship is also likely to

increase. In future, I believe that there might be a great expansion in such games as the technology improves. We are keeping a close eye on that sector.
I acknowledge the work done in a recent survey by Dr. Mark Griffiths and Mr. Nigel Hunt, which suggests that there may also be room for concern about the effects of those games which use what are very clearly computer graphics and which do not resemble real life or real people. This is why I welcome the work which the computer games industry itself, led by companies like Sega, has done under the aegis of the European Leisure Software Publishers Association—ELSPA—to establish an effective code of practice and a voluntary age classification system for those computer games which are exempt from classification as videos.
We have developed a system of media regulation in the United Kingdom based on arms-length principles and it is a long-standing tradition that the Government do not seek to intervene in matters such as programme content or scheduling. Within this framework, the responsibility for what is broadcast rests with the broadcaster and the broadcasting regulatory bodies, the BBC, the Independent Television Commission, the Welsh Fourth Channel authority and the Radio Authority. They are independent of Government and responsible to Parliament for safeguarding the public interest in broadcasting.
The Broadcasting Act 1990 places a clear framework for the independent broadcasters to follow with regard to broadcasting standards. The Act sets a statutory duty on the ITC to ensure that all its licensed services include nothing in their programmes
which offends against good taste and decency, is likely to encourage or incite to crime or to lead to disorder, or to be offensive to public feeling".
Similar provisions are also contained in the licence and agreement which set the framework for the BBC's operations.
Our broadcasting regulatory bodies also maintain detailed codes of practice for broadcasters and programme makers. In July this year, the BBC and the ITC issued revised tightened guidelines for their programme producers and purchasers on the portrayal of violence. Those guidelines prohibit the use of gratuitous violence—although we could all argue about what that is. They also require that the consequences of violent acts are not overlooked; that close attention is paid to the scheduling of violent programmes and advice given on the use of clear "on-air" warnings; and that warnings should be given of the dangers of broadcasting material depicting violent behaviour which children might imitate.

The motion having been made after Ten o'clock on Wednesday evening, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at four minutes past Twelve midnight.